Situations Where Life Insurance Makes Sense

Life insurance is intended to make sure loved ones are financially taken care of upon the unexpected passing of someone close to them. Policies can't reduce the emotional turmoil of losing someone meaningful, but they can ease financial burdens that follow. Here are several situations where the protection that life insurance offers makes sense to have.

When Parents Earn Income That Their Minor Children Need

Parents who financially provide for children under the age of 18 need life insurance to make sure their children can still afford a suitable lifestyle if the parent passes away. 

Without a parent's income, the surviving family members would likely struggle to replace the parent's lost income if there's no life insurance in place. They'd be unable to afford the expenses that the parent's income currently goes toward.

Life insurance, however, can provide enough funds to compensate for the loss of a parent's income. Depending on how much coverage a policy offers, surviving family members can live on either the payout of a life insurance policy or the interest that payout provides if it's invested.

When Parents Care for a Disabled Child

Most parents don't need to permanently provide for their children, because their children will eventually become adults and be able to earn their own income. Parents who care for permanently disabled children, however, have to prepare for a different long-term future.

When parents care for a child who's permanently disabled and won't be able to have a normal career, it's the parents' responsibility to make sure that child has the funds they need for housing, other life necessities, and whatever assistance they will require throughout their life.

While social services might help with some of these costs, a life insurance policy can help cover what public assistance doesn't pay for. A whole life policy, specifically, will provide a payout that can be used to pay for the disabled child's needs after their parents' pass away regardless of when that is.

When Children Pass Away While Young

One of the most tragic circumstances in life occurs when children pass away while they're still kids. This doesn't create the same long-term financial issues that a parent's death does, because parents usually don't live on their children's income. It does, however, create a short-term financial issue.

When a child passes away, their parent must pay for a funeral and burial (or cremation). A small life insurance policy can help cover these costs.

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