The need for life insurance can vary for personal reasons. Reasons may include higher prices with aging or future insurability for childless individuals. Below are the top eight reasons why an individual without children would obtain Life Insurance coverage.
Family and Family Through Friendship
The desire to leave a legacy to family is a pressing reason for obtaining life insurance. Family such as siblings, parents, cousins, nieces, nephews, Godchildren, or other young people may be potential beneficiaries. Those who are childless, and those who choose not to have children, often have strong connections with children in their lives, be it family or friends. Clients may desire to leave a legacy for those extended family members. Life insurance can afford devoted aunts, uncles, and many others the opportunity to give these children a bright financial future.
A Partner or Spouse
Insurance can guarantee security in the event someone becomes a widow or widower. The death of a partner is life-altering. However, with a life insurance policy, tax-free income gives an advantage during difficult times. This financial windfall after an unexpected death can provide options for the survivor. Perhaps moving to a new city, going back to school, or just pursuing a passion career. The future for the bereaved is open-ended when insurance is a factor.
Future Higher Prices
Life Insurance is priced based on the insured’s age and health. With that it could be argued that the price of life insurance will never be lower than it is today. Given this line of thought, the most budget-friendly would say locking in rates today is the best option for keeping long-term expenses lower.
One should not gamble on a guarantee of future good health. Once an individual has a significant medical event, insurance may be difficult, expensive, or impossible to obtain. If insurance is locked when a client is young and healthy, insurance is irrevocable regardless of a health change. Far too often, people only think to obtain insurance after negative health events. The best advice is to get it now.
Obtaining optimal amounts of insurance at a younger age can help with future stressful costs in the event of a significant life change. These changes could include decisions to contribute to a not-for-profit, estate taxes may impact future wealth, or potential future family addition like stepchildren or mentees.
Permanent life insurance expands investment options for owners of these plans. Life insurance provides an accumulation of cash and the possible use as tax-free income in later years. The younger one is when they obtain a permanent plan the better the insurance rate and growth potential of the cash can be. Plans can also be designed to create the lowest possible death benefit that results in more effective cash accumulation due to lower insurance costs. Death benefits have the ability to increase over time as cash accumulates. So, in a situation where in the future one needs more insurance, it could be found in the permanent plan.
Permanent life insurance, and some term plans, have added benefits of supporting needs while you are living. Life Insurance is not just for dying anymore. That is a catchy phrase to emphasize permanent plans do more for the owner than payout after they die. Living benefits can include accessing the death benefit through the acceleration of benefits in the event of a critical, chronic, or terminal illness. This could include everything from a heart attack to long-term care needs. The risk for needing care is high, someone turning age 65 today has almost a 70% chance of needing long-term care services in their remaining years according to the Administration of Community Living. Insurance can be a great way to plan for protection against a future where care is needed.
Often, individuals without children have the time and energy for higher philanthropic goals. Relatively low contributions to an insurance plan throughout a lifetime can significantly compound in a death benefit. This would allow someone to give a substantial donation to an organization of their choosing. A client may assign a not-for-profit organization as a beneficiary to their insurance plan. This allows the individual to leave a legacy to the organization. It can also help mitigate estate tax impacts.
The reason for investing in Life Insurance will vary in each situation. Life insurance is not just for future generations of direct offspring. There is a long list of reasons why someone without children would still opt to purchase coverage. Reach out to EMG today to discuss your needs and goals for insurance.