When you start a job and fill out new hire paperwork, you might notice the small section of your forms discussing group life insurance. The policy might pay out $20,000 to $30,000 (ish), but this is rarely something you can take with you when you change jobs.
With life insurance, you get the death benefit and a living benefit. What the heck is the difference? With the death benefit, your family will be able to gain financial security with the money you've contributed to the policy when you pass away. But the living benefit? That's a more interesting concept. The living benefit allows you to withdraw from the policy for certain life events, such as a terminal illness or specified medical condition.
But do you really need life insurance at a young age? Well, it really depends on your current financial situation.
- On one hand, the younger you are, the less expensive it is to insure you. So, if you can afford a few hundred extra dollars a year to contribute to the policy, why not?
- If you're young, have a family, a little debt and want to make sure your family is protected in the tragic instance you pass away unexpectedly, life insurance is probably a good idea to make sure your family can get back on their feet financially.
- On the flip side, if you don't have any dependents at this age, it's probably not a good investment right now. But if there's any question that you, or your partner, would be in a financial catastrophe if one of you died suddenly, it's likely a good investment.
- Lastly, if you have the money for it and feel it's a good investment, then why not? But a few hundred to a thousand dollars a year is a lot of money, so think wisely before investing in a policy. You don't want to let it lapse!
One of the best ways to make sure you're making sound financial decisions for your future is by talking to an expert. Ask your credit union if there's a financial planner you can speak with (for free!) about life insurance. Even better? There might be a policy available to you through your credit union at a more reasonable cost. And if you're ready to expand your knowledge from the comfort of your home, take one of our courses to start owning your future today.