What Happens if You Don’t Have Life Insurance?
April 6, 2023
If you don't have life insurance, it can create unforeseen consequences for your family members when you pass on. But just how bad can it get? It is vital to understand why you must heavily consider the implications of such a decision. Understanding what life insurance covers can help you decide if it is a suitable investment for you.
What Expenses Build if You Don’t Have Life Insurance Cover?
If you die without life coverage, your family will be responsible for paying your final costs out of any estate you leave behind.
Outstanding Debts
Creditors for any outstanding liabilities, including loans and installment debts, can seek settlement from the estate if you die without a life policy in effect.
Funeral Costs
A 2021 National Funeral Directors Association study indicates that the median funeral cost is more than $7,000. Depending on the area where you live these costs may be substantially higher. The expense could burden your family's finances if you die without a life policy, which is why you need life insurance.
Final Medical Expenses
Any final medical expenses will depend on the nature of your death, but costs for emergency hospital visits, intensive care stays, and even hospice services add up quickly. A life policy can help cover those unexpected costs.
These are expenses that your family may have to pay out of their own pockets if you do not have life coverage.
How Do You Qualify for Life Insurance?
The qualification process varies depending on your age, the type of policy, and the death benefit amount. Some policies require a medical evaluation, while you may only need to answer medical history and lifestyle questions for another.
Your insurance agent or carrier can explain the requirements for each policy to help you choose the one that best fits your needs. Term life policies typically are lower cost especially for younger adults. A whole-life policy might require more information and have a higher premium.Understanding the life insurance requirements helps you choose the policy best suited to your situation. The sooner you plan for your life coverage needs, the more cost-effective and accessible coverage may be.
How Much Life Insurance Do You Need?
Once you understand the value of a life policy, you need to determine how much coverage you need. It is an individual decision, but some standard elements contribute.
- Your final costs: Consider the cost of final expenses. Choose a sufficient death benefit to cover those costs for your family, including an estimate for medical expenses.
- Your income:If you contribute significantly to the household budget, you may need to replace your income for a while to help your family adjust. Multiply your annual earnings by the number of years you wish to replace income and include that in your calculation of how much life insurance you need.
- Education and inheritance:Sometimes, life insurance can help establish education funds or inheritance for your children. Consider how much you want to leave for them and include instructions to create a trust account.
The right life insurance investment makes a difference in the grieving process and the adjustment period that your loved ones experience.
About 1891 Financial Life
At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs.
Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.