Once you have decided to purchase life insurance you may wonder if you should also purchase policies for immediate family members. In answering this question it is important to remember the only purpose for term life insurance and the primary purpose of permanent life insurance is income protection.
So in that case of a spouse this question is often very easy to answer. If your spouse also works you need to protect his or her income as well. If you think about the problem a little further, you will find that even in the case of a full-time homemaker, there is a reason to buy a policy.
This is because the death of the homemaker will affect the primary breadwinner's disposable income. Money would need to be used for child care expenses, additional time would need to be taken off of work which could affect future raises or salary, and either more money or time would need to be spent on day-to-day upkeep of the home and meals. So, in case of a full-time homemaker, you are not directly replacing income with a life insurance policy, but you are protecting yourself against future expenses that would be incurred if the homemaker passed away prematurely.
Since I'm not trying to sell you anything, I find it very easy to answer the question of whether you need a life insurance policy for your kids. No, you don't need life insurance for your kids. Kids are expensive, you are not depending on them. They depend on you. Kids tend to outlive their parents anyway. While the point of life insurance is planning for any contingency, the line must be drawn somewhere.
I realize permanent life insurance has an investment component, but there are other financial instruments that allow you to save for future expenses like education. You don't need to wrap your investment for your children's future into the same financial instrument that is normally used for protecting income in case of an untimely death.
So in that case of a spouse this question is often very easy to answer. If your spouse also works you need to protect his or her income as well. If you think about the problem a little further, you will find that even in the case of a full-time homemaker, there is a reason to buy a policy.
This is because the death of the homemaker will affect the primary breadwinner's disposable income. Money would need to be used for child care expenses, additional time would need to be taken off of work which could affect future raises or salary, and either more money or time would need to be spent on day-to-day upkeep of the home and meals. So, in case of a full-time homemaker, you are not directly replacing income with a life insurance policy, but you are protecting yourself against future expenses that would be incurred if the homemaker passed away prematurely.
Since I'm not trying to sell you anything, I find it very easy to answer the question of whether you need a life insurance policy for your kids. No, you don't need life insurance for your kids. Kids are expensive, you are not depending on them. They depend on you. Kids tend to outlive their parents anyway. While the point of life insurance is planning for any contingency, the line must be drawn somewhere.
I realize permanent life insurance has an investment component, but there are other financial instruments that allow you to save for future expenses like education. You don't need to wrap your investment for your children's future into the same financial instrument that is normally used for protecting income in case of an untimely death.
By getting life insurance policy you can remove uncertainties as life is full with uncertainties and with Insurance policy you are ensures that your loved ones continue to enjoy a good quality of life against any unforeseen event.
income protection cover
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