Getting through the teen years, graduating from school and finally getting out on your own is a huge accomplishment. Congratulations! This is an exciting and fun time as you start to map out your future and make new goals. The financial decisions you make now will have a lasting impact, so be sure to take the time to learn about how to save for retirement and protect your income.
Most young people may not be thinking about life insurance, but the time is now to consider what would happen to your loved ones if the unthinkable happened and you suffered an untimely death. September is Life Insurance Awareness Monthlink opens in a new window, and an important reminder to look into the why and how of life insurance.
Protecting loved ones from your debt
You may think any debt you have will die with you, however that is not always the case. If someone, like a parent or a spouse, is a joint credit card holder, they will be responsible for any credit card debt you have, regardless if they made the purchases or not.1
Additionally your spouse could be held responsible for your debt, even if they aren’t co-signers , if you live in a community property state which includes Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.2
Who is responsible for student loan debt in the event of your death depends on the type of student loan you have. Federal loan debts are erased if you die before they’re paid off. Private student loan lenders have different policies, so be sure to check on yours to fully understand whom, if anyone, could be held responsible. Even if a student loan is totally forgiven, there could still be tax implications.2
Protecting loved ones from your final expenses
You probably haven’t thought about it, because it’s not something most people enjoy planning for, but final expenses, including:
Can average from $6260-$87553, depending on the types of service and where you live. This doesn’t include the cost of a reception afterwards, which is a common custom following a funeral.
A life insurance policy could help your loved ones pay for these final expenses and spare them the stress of worrying about related costs, so they can focus on grieving.
Protecting your current or future family
If you have children, a partner and/or a spouse who depends on your income to maintain their home and quality of life, having enough life insurance is essential. Check your policy and plug your unique information into this life insurance calculatorlink opens in a new window to make sure you have enough.
If you don’t have children but plan to have them one day, buying life insurance while you’re relatively young and healthy, and before you’re pegnant , is a smart move and can allow you to lock in low rates that you wouldn’t be able to get later on.
Protecting your bottom line
Most people overestimate the cost of life insurance. The good news is that on average, a healthy 30 year old can buy a 20 year, $250,000 term life insurance policy for around $13 per month.4 Whole (or permanent) life insurance costs more per month, but can serve as a savings vehicle as well. To find out what plan is best for you, contact one of our agents today-and stay safe!
1-Johnson, H. D. (2019, June 28). Here's What Happens To Credit Card Debt After Death. Retrieved from https://www.bankrate.com/credit-cards/death-inherits-credit-card-debt/link opens in a new window
2-Templeton, D. (2013, June 23). What Happens to Student Loans When You Die? Retrieved from https://abcnews.go.com/Business/student-loans-die/story?id=19460467link opens in a new window
3-(n.d.). News. Retrieved from http://www.nfda.org/news/statisticslink opens in a new window
4-(n.d.). Do Single People REALLY Need Life Insurance? Retrieved from https://lifehappens.org/insurance-overview/life-insurance/who-needs-life-insurance-single/?_ga=2.236808833.1602889022.1567636128-529731056.1564696138link opens in a new window