Life insurance is viewed as a financial safety net and is essential for anyone who has people depending on them. These could be children who are going to school, sick parents, or a family that needs their day-to-day bills covered. In case of premature death, the resulting loss of income may have an adverse effect on the lives of the surviving family members. The goal of life insurance is often to supplement the missing income and allow your dependents to maintain their lifestyle.
If you have family property secured as collateral for a loan (a fancy way of saying mortgage 😉, it can be an excellent idea to have life insurance that can cover the entirety of this debt. If you pass away, the loan and required payments do not just magically disappear. If the surviving family members cannot make the payments, they may be evicted or forced to sell, leaving them homeless. The same principle applies if you co-signed your children’s student loan, they are left with the burden of paying the whole amount on their own in case you pass away
In most families, it is the breadwinner that sees the need to own life insurance. However, it is worth mentioning that even the spouse who stays at home should consider getting life insurance. While they may not bring in money to the household, they have roles and responsibilities that allow the family to save on expenses such as daycare. If they were to pass away, someone would have to assume the role. This would result in a lower income if the working spouse were forced to either stay at home or to pay for a caregiver. It is, therefore, a good idea to have life insurance for both spouses.