Life insurance is designed to protect your loved ones when you pass away – to assist them financially, cover any debt, and contribute to other “life” things such as college funds and life admin. It sounds like life insurance is mostly advantageous – but like anything, there are some disadvantages and when it comes to life insurance, some can pop up depending on your unique circumstances.
So, let’s take a look at 3 advantages and 3 disadvantages of life insurance.
Advantages of Life Insurance
Your family is protected
Unfortunately, life is unpredictable and we never know what could happen to us at any point. Once we have a family and there are people who rely on us for care and financial support, it is important they are looked after in the event something happens to you. This is where the biggest advantage of life insurance pops up – your family is protected. Life insurance works to guarantee your child’s financially secure future – with life insurance payouts going towards the mortgage, replacing lost income, contributing to college funds and covering any debt you leave behind. It provides peace of mind that your family will be okay financially!
It’s easier than ever to obtain
Obtaining life insurance quotes and purchasing a life insurance policy is easier than ever, thanks to online life insurance platforms like Everyday Life. You no longer need to jump between salespeople at big insurance companies and wait months to obtain quotes. Online platforms make it simple to obtain a tailored quote, by filling out a short questionnaire based on basic lifestyle and income questions. You can simply and easily get started with your recommendation here and obtain a quote in less than 5 minutes.
You can tailor your coverage fit your budget
Depending on the amount of coverage you need from your life insurance plans, you can choose how much you want to spend on your policy per month. For example, if you have minimal dependents, you don’t have many people who need to rely on you financially when you die, so you can opt for a plan that has less coverage and is at a lower cost. Additionally, you can ladder your life insurance policies so that your life insurance coverage (and subsequently premiums!) change over time as your children grow up and savings build. This means you are only paying for the coverage you and your family require at every point in your life. We talk about term laddering here, and you can see how the concept applies to your own personal circumstances here.
The disadvantages of life insurance
It can be complicated if you have complicated circumstances
For most people, obtaining life insurance is a very easy process involving a few questions about simple things like your family situation and income. In extenuating circumstances of complicated health conditions or a criminal record, there may be a few additional hoops to jump through when obtaining your life insurance policy. While it doesn’t make it ridiculously tricky nor overly complicated, there are just a few extra steps you may need to go through.
It’s not always necessary for your situation
Sometimes, your situation simply doesn’t require life insurance. Things such as not having children, not having anyone else who relies on you financially, or confidence in your family’s financial security in the event of your passing – even without life insurance. With that said – obtaining life insurance is definitely the best way to ensure complete financial security (even if you think you have everything covered!).
It can be expensive (again, if your circumstances are a little more complicated)
Life insurance is, of course, the most affordable when you’re younger and also if you have a clean bill of health. This is because when you’re younger, generally there are fewer people who rely on you financially and the older you get, the more health issues that can arise and therefore, the more complicated the insurance policy gets. If you are looking to get life insurance later in life, it could be more expensive than if you were to purchase it in your 20’s or 30’s.
When it comes to life insurance, it’s clear that the advantages far outweigh the disadvantages. Namely, that your family is protected the way they should be financially, that your life insurance can be tailored to suit your specific needs and also that your coverage plan can step down over time. To see how you can tailor your own life insurance plan, get started here!