Why women need life insurance
By Elisa Hurtado
Today, #women have more financial responsibilities than ever before. But do you ever wonder, how will your family or loved ones manage financially if something happens to you and heaven forbid, you die?
Whether you are single, married, employed, or a stay-at-home mum, you probably need #lifeinsurance. At the very least, life insurance can help pay for the costs of funeral and burial services, estate administration, outstanding debts, estate taxes and medical expenses during a time that would already be devastating for your loved ones.
Who needs life insurance?
Increasingly, families depend on the income of two working parents. If you're a working mother, your income can have a significant impact on the quality of your family's lifestyle. Your income helps cover the cost of ordinary living expenses such as food, clothing, and utilities, and it provides savings for your children's tertiary education, and for your retirement. Life insurance protects your family by providing proceeds that can be used to replace your lost income if you die prematurely.
Often, women, like men, think that it's not necessary to buy life insurance because they have no dependents. What's often overlooked is that life insurance can provide necessary funds to pay off car loans, education loans, debts, a mortgage, taxes, and funeral expenses that might otherwise be the responsibility of family members. Also, the cash value of permanent life insurance may be used to supplement retirement income.
Whether you're divorced, widowed, or simply a single mum, you're most likely primarily responsible for your child's support. If you die prematurely, life insurance can provide ongoing income to cover child-care costs, medical expenses, debts, and future school fees.
Maintaining a household is a full-time job, and you have many important roles and duties. The cost of the services performed by a stay-at-home mum could be quite significant if someone had to be hired to do them. If you die, your surviving spouse may have to pay for services such as child care, transportation for your children, and housekeeping. Taking over these added responsibilities could cause your spouse to shorten work hours, resulting in a reduction in income. Proceeds from your life insurance can help your spouse pay for services that keep the household running and allow your spouse to keep working.
Many women find themselves providing care for both children and elderly family members. Caring for an aging parent or family member can include paying for the costs of adult day care, medical expenses and extra transportation. Adding these expenses to the costs of maintaining a household, child care and school fees can be financially overwhelming. Unfortunately, these added financial responsibilities often continue after your death. Life insurance provides a source of funds that can be used to help pay for these expenses.
You may be one of the increasing number of women business owners. If you die while owning your business, life insurance can be used to provide cash for company expenses such as payroll or operating costs while your estate is being settled. Also, life insurance can be a useful tool for business owners structuring buy-sell arrangements or providing benefits to key employees.
Life insurance types and options
Throughout the years, a woman’s role in the family and in the business world has changed quite a bit. And with this change has come her need for life insurance. Whether she’s the primary breadwinner of her family as an executive in the corporate world, a single parent working a 9-to-5, a stay-at-home mum, or something in between, women need life insurance more than ever before.
Many women today are making more money than their spouse or they are working as a single parent and the head of a household. Even a stay-at-home mum has a dollar value attached to her work in the home. This creates a financial responsibility to her family and a need for protection from the loss of her salary should the worst happen.
No matter what her career choice or marital status, however, life insurance for women is important. And because women’s life insurance rates are typically cheaper then men’s, it’s relatively easy to fit a policy into any budget.
Life insurance replaces your income
If your income helps to support you, your children, and/or your partner, a life insurance policy will provide financial support to them in the case of your death. This can help with the everyday expenses, of course, but it can also assist with helping to cover the cost of the funeral and anything related to it. Sure, it’s unpleasant to think about, let alone plan for your own death but it is a responsible way to make sure your family doesn’t have to worry about such things on top of having to deal with your loss.
Life insurance covers stay-at-home mums
If you’re a stay-at-home mum, don’t be fooled into thinking you don’t need life insurance. There’s a dollar value attached to what you do at home — a high dollar value for valuable and diverse work that’s just as important to your family’s welfare as working outside of the home.
While we don’t like thinking about a worst-case scenario, if something did happen to you, having a life insurance policy would provide financial support to your family during a very difficult time.
Single ladies need life insurance too!
If you’re single and you don’t have any children, ask yourself a couple of questions concerning your life insurance needs:
Do you take care of an aging parent or a sibling?
Do you have a lot of debt? More importantly, do you have a co-signer on that debt?
Typically, the executor of your estate will sell off whatever they can to help pay off your debts when you die. If you have co-signer on a loan, however, they will be responsible for repaying it. Of course, if neither of these scenarios applies to you, you’re probably OK to put off purchasing a life insurance policy. But keep in mind, it’s cheaper to buy one when you’re younger.
How much life insurance do you need?
As a general rule, and depending on your age, you should multiply your income by anywhere from three to 15 times to arrive at the amount of life insurance you should consider buying. So, if you’re a 40-year-old woman making $80,000 per year at your job, you will want to look at buying a policy that’s worth about $1.2 million.
And as a stay-at-home mum, don’t sell yourself short when deciding on an amount for life insurance. Just because your family doesn’t depend on your income, it doesn’t mean you don’t need any life insurance.
Stay-at-home mums could be charging around $120,000 per year for their work. This value was taken from the duties they perform in the household on a regular basis. Have you ever thought of yourself as the CEO of your home? You should. What about housekeeper, cook, janitor, psychologist, chauffeur and day-care teacher, just to name a few? Believe it.
According to Loretta Worters, vice president with the Insurance Information Institute in the USA, if a stay-at-home spouse dies, the family would need someone to handle the household duties. That’s no small task. The cost could be substantial and a life insurance policy would help to cover those expenses.
Women actually pay less for life insurance than men
How are life insurance rates determined? They are priced according to the average life expectancy for your gender and age. So if you smoke, participate in any dangerous activities on a regular basis, or have certain health issues, it will affect what you pay.
There is also a difference between what men and women pay, primarily because men have a shorter life expectancy than women. In fact, women outlive men by about five years. Women tend to develop cardiovascular problems like heart attack or stroke later in life than men do. This longer life expectancy will help to lower your life insurance premiums.
Finding the right insurance policy for you
Using financial advisors can make you life easy.
You can certainly do it alone when it comes to managing your money. And you could also try to do it yourself when it comes to auto repairs. In both areas, doing it yourself is a brilliant idea for some, and a flawed plan for many, many others. Mastering personal finance requires many hours of research and learning. For most, it’s not worth the time and ongoing effort.
When it comes to the different types of life insurance you can choose from, you can select a term life policy at a cheaper premium for a specific amount of time, or you can select a permanent plan that will last the rest of your life and provide you with additional financial planning options. The type of insurance you choose and the amount you purchase will ultimately depend on what your goals, needs, budget and family situation are. For instance, if you are still young and single, your life insurance needs will be much different than if you are a bit older, married and/or raising a family.
No matter what your current life situation, a licensed life insurance agent is ready to speak with you about your life insurance needs.
About this contributor
Elisa Hurtado is a Director at Yes Insurance Solutions, Sunshine Coast.
She assists her clients to compare the policies and rates of hundreds of different insurance companies to find the best solution for them.
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