Going steady? It might be worth talking about life insurance.
Whether you’re officially tying the knot with nuptials, or going steady as de-facto partners, it might be worth sparing a thought for life insurance.
Not many people do, possibly because of the misconception that it only pays out in the event of death. The truth is it can cover a lot of things. Death is just the worst case scenario.
Permanent or temporary disability, severe medical issues and other things can all take a toll on relationships and life plans, and this is exactly what life and disability insurance are meant to help with.
If you and your partner plan on being there in sickness and in health, up to and including ‘til death do you part, then that’s probably a sign that you’ll have to talk about life insurance sometime.
Why getting a life insurance policy makes sense
There are numerous reasons why a person should consider obtaining a life insurance policy when starting a relationship:
- Income Replacement – When you and your partner decided to have a future together, you have also planned a life based on two incomes. What will happen if for some unexpected reason, one of you passes away? Life insurance will be useful in replacing half of the income that was lost due to death and maintain the same standard of living.
- Mortgage Protection – Do you or your significant other want to be homeless should one of you die unexpectedly? Think about it, coping with loss is overwhelming already, if you add financial burden on the recipe, it could add up to catastrophe.
- Final Expenses – The last thing you want for you or your partner to shoulder is an extra burden like funeral expenses, burial costs and medical bills. All these expenses can add up to a hefty amount.
- Education – Consider education expenses if you have children. Once you become a parent, the rule of thumb is you and every adult in your household that has income should have life insurance coverage until the youngest child graduated from college. The money from your life insurance can cover college expenses. How can this be? The monetary benefits from the life insurance can be invested and therefore it has a potential to grow.
After considering all these factors, it is time to start planning what is important for you and your partner and identify what your long-term dreams are. You can get the help from a financial adviser to determine your financial priorities as well as choosing the life insurance you can afford.
Choosing the perfect life insurance policy
Although there is no 'perfect' policy, there are simple tips to take when finding a quality policy for you and your partner:
- Affordability – Decide which one you and your partner can afford. This is very important because if you miss a payment, your policy gets cancelled and you will have to start all over again. Weigh the associated costs before purchasing.
- Type of Policy – Compare each policy that is available within your area. Also consider the factors should you decide to get two single policies or joint life insurance. The benefits of a joint life insurance policy are that it is cheaper and very cost effective but it could end up leaving the other party uncovered. Having two single policies means that should there be a relationship breakdown, both plans need not be cancelled. That's because unlike a joint life insurance, both single plans are separate. Let's face it, life has no guarantees and being prepared will save you the hassle of changing everything and starting all over again.
- Lifestyle – Insurance companies see you as a risk until they have a reason to believe otherwise. If you are a smoker, or an extreme sport fanatic, you might consider changing your lifestyle if you are looking for an affordable life insurance policy. As your personal situation changes, you life insurance does too.
- Educate Yourself – Have someone who has experience review the policies available. Use the tools available to you, research the Internet, ask your friends and ask your parents. Write all the pros and cons and get a second opinion. Get at least five quotes you can compare with. Research your choices thoroughly. Keep in mind that whatever policy you choose, it is long term.
- Hidden Catch – Be careful when choosing your policy. Treat it like you treat all other legal documents. Read through the whole document and do not be afraid to sleep on it before you sign.
- Choosing the Right One - Make sure you know the reputation of the company and the underwriter you are considering getting your policies from. Ask your friends and families for references and make sure you confirm their credentials.
Now that you have the tools to determine why you need life insurance and how you can get one, start doing your research on the policies which suit your needs now. Don't put it off. The younger and healthier you are when you get insurance, the more affordable it will be and the easier it will be to get approved.