It’s time to have that life insurance talk with your partner
LIFE insurance is that one type of insurance that people are reluctant to buy because someone else will benefit from it, which is why so many people are unwilling to get it. But though the subject isn’t as sexy as say, investing in stocks and seeing returns, it’s really a discussion that you should be having with your partner, especially in these unprecedented times.
What will happen to the other partner if one partner dies, or becomes gravely ill? What of the children? Insurance advisor Stephon Belnavis said while life insurance will allow you to provide for your family in the event of your passing, there are myriad other benefits to having a policy.
It’s critical, he said, that life insurance should be just as important a part of your financial planning as saving and investment is.
While you settle on who will benefit in the event of your demise, also have this discussion with your partner:
What does it cover?
When looking at insurance look for policies that give life coverage, savings, accidental death and dismemberment coverage. This will ensure that death is not the only area covered, as many other things can happen in life that will affect your earning potential.
How much income will it replace?
Sign up for a policy that will replace a substantial amount of your income, should the need arise. This is important especially if you are the breadwinner of your family, and you have minor children depending on you for support. The money your beneficiary receives should be substantial enough to really sustain your dependents on your passing, bridging the gap for a period of time.
Debt coverage
Some policies will cover or write off outstanding debt, meaning that your family won’t be bogged down with this added burden on your passing. Should you die in a state of indebtedness, no claim can be laid against your policy to recover funds to fulfil obligations you may have left behind.
Make changes to the policy as your situation changes
You may want to convert your policy as your life situation changes — for example, the same type of policy you had as an unmarried young worker won’t necessarily benefit the right people after you get married and have children. Insurance isn’t a one-size-fits-all approach, but it’s important that you keep your broker up to speed with the changes in your life.
Cash surrender?
A policy with a cash surrender value allows you to accumulate a cash value as a way to save for the future. This can, for example, supplement pension payments after you retire.
