Think you don’t need life insurance if you don’t have kids? Think again. It may seem like an unnecessary expense. But there are many reasons to have life insurance, even if you’re not supporting a family.
Still not sure if you need life insurance coverage? You’re in the right place. A life insurance policy can help replace your income and pay for things like housing, living expenses and educational costs in the case of an unexpected death. Our helpful online resources provide plenty of solid life insurance information, so you can understand the type of coverage that you may need to meet your needs, life and budget.
What to consider with your life insurance coverage
If you’re thinking about life insurance products, here are some questions you should be asking:
• Why do I need life insurance coverage?
• How do I choose a life insurance product?
• How much life insurance coverage do I need?
• What fees and charges will I pay?
Some of the reasons for having Life Insurance:
1. Mortgage protection
Mortgages are getting more and more common in Pakistan. Whether you live by yourself or with a spouse you may want to buy life insurance as mortgage protection. Think about it − you don’t want the person you live with to be homeless if you die unexpectedly, do you? Term life insurance can be used to pay off an outstanding mortgage balance.
2. Income replacement
You and your significant other may have planned for a future based on two incomes − but what if one of you passes away unexpectedly? Life insurance can be used to replace the lost income so the survivor can maintain the same standard of living.
3. Final expenses
You’ve seen the commercials − funeral expenses, burial costs and medical bills can add up to a hefty amount. The last thing you want is for your loved ones to shoulder this extra burden.
Life insurance can be used to plan for these final expenses. Permanent life insurance is available in various amounts, so you can pick a death benefit that meets your needs.
4. College funding
OK, OK … this one only applies if you have kids. But have you seen the tuition rates lately?
Life insurance can help fund a college education. If you die, the death benefit may be invested and potentially grow to the needed amount by the time your children reach college age. Feel better knowing that you helped prepare for their future − even if you are not there to see it.
Just keep in mind that investing involves market risk, including risk of loss of principal. Take care to ensure that permanent life insurance is suitable for your long-term life insurance needs. You should weigh any associated costs before making a purchase.
The earlier the better
So maybe you’re starting to see the need for life insurance … and you’ll call your agent next week, right? Don’t put it off! Typically, the younger you are when you get insurance, the lower the cost and the easier to get approved.
Now……………….
How much life insurance do I need?
When you’re buying a life insurance policy, it’s important to choose the right amount of coverage. You don’t want to have too much − and pay for protection you don’t need − but you also don’t want to have too little, and leave your loved ones at risk.
Determining your life insurance needs
There are two common methods to calculate the amount of life insurance you need.
The lump sum need method calculates the amount needed to pay for:
• Outstanding debts
• Funeral expenses
• Taxes
• Household expenses
• Emergency needs
• Educational costs
The income replacement method calculates the amount needed to replace a percentage of your income for a specific number of years, usually until your youngest child is out of college.
Calculating future economic needs
When you are determining your family's future financial needs, you don’t have to provide 100 percent of the income that will be needed. For instance, if you are planning to provide Rs. 1,000,000 for your child's college tuition in 15 years, you don’t need Rs. 1,000,000 now − you need an amount that will grow to Rs. 1,000,000 by the time college starts.
Your investment or life insurance professional from State Life Insurance can help you determine the right amount to buy to account for the time value of money.