Good Morning Everyone and Happy May 1st. Very often people think that Life Insurance is only for older people who want to leave some money to their family and friends after they pass on. This statement couldn’t be farther from the truth. Life Insurance is not meant to be a financial gain for someone due to the loss of a loved one. Life Insurance is actually meant to be used as a means of protection to cover our final expenses and debts in case of an unfortunate event. People may not want to leave a final financial legacy to their friends and family, but they also may not want to leave them with debts; this is why buying Life Insurance is a good idea for young people to use as a means of protection.
Young people actually need more Life Insurance than older people because in general younger people have more debts. When we are younger our debts are higher and our assets are lower because we haven’t had the chance to let our assets accumulate over time. As we get older our debts will be paid off and therefore our assets will grow. Of course our Life Insurance needs will change over time as our financial situation changes. Eventually we may not even need Life Insurance if the value of our assets exceeds the value of our debts, and if our assets have accumulated to an amount of money that will cover our final costs such as final taxes and funeral expenses.
Life Insurance premiums can usually be paid on a monthly or annual basis, and they can be very expensive depending on the type of Life Insurance that we purchase as well as how much coverage we choose. This is why we need to make sure that when we buy Life Insurance we really need the coverage, otherwise the premiums could not be worth the cost.
Here are 2 Great Reasons Why Young People Need Life Insurance:
1. After College Graduation. Young People are just starting out their personal and financial lives after college graduation. We may have student loans and other debts that we accumulated while studying in school. If an unfortunate event should occur we definitely don’t want to leave our loved ones with the burden of having to pay off our student loan debts. Life Insurance premiums should be relatively low (depending on your personal health) for recent college graduates. Purchasing Group Life Insurance with our employer may be the most cost efficient way to purchase Life Insurance.
2. Buying a Home. A home may be the most valuable asset that we will ever have, and a mortgage loan may be the biggest debt that we will ever have to pay off. Having Life Insurance on our mortgage loan is a smart financial strategy, especially if we have a family who wishes to remain in the home after the loss of a life. If we live alone our home could be sold and the proceeds of the sale could be used to pay off the mortgage loan. However, if we have a family who wishes to stay in the home Life Insurance is a good idea to cover the costs of the mortgage loan and protect our family. If the mortgage loan was approved with a two income household, a single income spouse may not be able to sustain the mortgage payments alone and will therefore be forced to sell the home. Life Insurance ensures that this will not happen. We can purchase Life Insurance that is attached to the mortgage loan and the value of the Life Insurance decreases as the value of the mortgage loan declines. We can also purchase a separate Life Insurance policy that maintains its value over the years.
Photo by theodorelee
Tahnya is 30 years old and lives in Montreal Quebec. She graduated in 2005 from Concordia University, and she currently works for a major International Financial Institution. She recently launched http://www.mediamadam.ca/. You can follow her on Twitter @TahnyaP.