How do I know if I need life insurance or not?

Who needs life insurance?

Surely most people already know what life insurance is, but you may not be sure if you need onewhy or what you need it for, or when is the ideal time to hire it.

Life insurance offers peace of mind that in the event of an accident or illness that results in death or disability, your loved ones will not have financial problems since they will receive compensation. With this, they will be able to face credits or mortgages, pay day-to-day expenses, etc. Therefore, those who will need it most will be couples who share their expenses and especially those who have a child or are dependent.

Do I need life insurance? If you have ever asked yourself this question, we will tell you some keys to know if you need it. In general, if you’re single, don’t have children, and don’t have other dependents (such as the elderly or disabled), you most likely don’t need life insurance, but you may want coverage. in case of permanent or absolute disability, to maintain your quality of life if necessary.

The same happens with couples, both in cases in which both parties work and receive a salary with which they can cover the expenses in case they have to do it on their own and in those in which this is not the case and one of the spouses economically dependent on the other person.

When is life insurance necessary?

In either case, life insurance offers an extra level of peace of mind, both in the event of death and disability, which will allow both parties to maintain their standard of living in the face of any unforeseen event.

In addition, in many cases, when applying for a mortgage, banks offer discounts for having contracted life insurance. In this case, even if you are single or have a partner and you both work, it may be beneficial for you to take out life insurance not only for the disability part but also for mortgage payment coverage.

On the other hand, in the case of couples, the question could be whether both should take out life insurance. When only one of the parties works, the question may arise as to whether only this person should take out the insurance. However, it may be interesting for both to do so when there are children or dependents, since the person who is not working may take care of the children and, if this is missing, the other spouse will need extra help (such as a nanny, nursery, etc.). This represents a new expense for the family and life insurance can help cover it and deal with the situation in a simpler way.

Who takes out life insurance?

As you can see, almost anyone can benefit from life insurance, as they cover a large number of assumptions depending on the person and their family situation. Whether you are single, have a partner, or have started a family, life insurance can give you the peace of mind you need for the future and ensure financial stability in the face of the most difficult situations.

When to take out life insurance

We already know who needs life insurance, but another question that may arise is when is the best time to hire it. Although it is usually thought of taking out life insurance at the time the children appear, as it is one of the most vulnerable situations, it may be a good idea to do it before, when you are still young, since at this time the cost is usually less and long-term savings can be achieved

Why do I need life insurance: all its benefits

What are the benefits of having life insurance? Here are some of the most important:

  • Tranquility. This is undoubtedly the greatest benefit of life insurance, as it covers one of the greatest unforeseen events in people’s lives, such as death or disability.
  • Economic stability for your loved ones, whatever happens.
  • Tax-free money. Contrary to what happens with an inheritance or other types of earnings, the money received from a life insurance policy is not subject to inheritance tax or personal income tax. Therefore, the family will receive the full amount.
  • Non-debt money. Even if the policyholder had debts, the beneficiaries of the insurance do not have to deal with them with the money received. Therefore, they could waive the indebted asset and the debt and continue to receive the insurance capital.
  • Quality of life in case of disability. Although in these cases state aid is usually received, this may not be enough to maintain and ensure the quality of life of both the affected person and their family. Life insurance offers extra capital to ensure economic well-being in a situation as complicated as this.
  • Tax deductions. Although it does not happen in all cases, insurance to cover mortgage costs can be deducted from the income statement.
  • Bonuses in the mortgage. As we already mentioned, some banks offer bonuses or discounts in the mortgage conditions when having life insurance.

What should life insurance cover?

It is important, before taking out life insurance, to know what it should cover and to carefully review the conditions of the policy. For example, not all insurance covers certain risky activities or professions. Not all policies cover temporary or permanent disability or traffic accidents. You should also look at the capital that you will receive in case of collecting the insurance, this being one of the most important points.

For all this it is essential, taking into account your personal, professional, and family conditions, to choose the insurance that covers everything you really need.

The importance of taking out life insurance

We have already seen who needs life insurancewhy this type of insurance is necessary, what is the best time to hire it or what it should cover, and what its main benefits are. All this helps us understand the importance of taking out life insurance, although not in all cases, but for many of them.

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