4 types of people who should definitely have life insurance

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  • Life insurance is a contract between you and an insurance company, in which the insurer undertakes to pay the beneficiary upon your death.
  • Talking about what happens to your money after you die may sound upsetting, but it’s worth it.
  • The financial planner recommends that business owners and private student loan borrowers obtain life insurance.

life insurance It is a contract between a person and a life insurance company, where life insurance company Agrees to pay the beneficiary – usually a member of someone’s family – in the event of the death of the insured person. The contract specifies how much money the beneficiaries will receive.

It can be shocking to talk through such details with a complete stranger at a life insurance company, but Financial planner Spencer Bates He says it’s worth having that protection in place if the worst happens, and it won’t cost much.

“Life insurance for someone between 40 and 60 is very inexpensive because there is a very small chance that you will die,” he explains.

Here are four types of people who should have life insurance, according to Bates.

1. People with private student loans

Federal Student Loans After a borrower dies, but borrowers who have private student loan debt may face different circumstances.

Private student loan debt that you took out on your own may be forgiven without a problem – although not always, each lender’s policy will vary – but private student loan debt that was taken out from cosigners will be transferred to cosigners if the loans were taken before November 20, 2018 .for each judgment in Economic Growth, Regulatory Relief and Consumer Protection Actcosigners must be released from the loan if taken out after November 20, 2018.

A life insurance policy ensures that a colleague or next of kin can cover student loan debt, regardless of the student loan lender’s policy.

2. People with cosigners on their debt

“If you’re single without dependents, and you have a $20,000 car loan, the auto company might take your car back, but it won’t go after anyone else in your family because no one is allotted to you,” Bates says. In contrast, cosigners are responsible for paying off unpaid debts after a person dies.

So, if someone joins you for a personal loan, for example, you’ll need to get a life insurance policy that covers the cost of that debt.

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3. Business owners who want to pass on the family business to their children

If you’re a business owner and plan to pass the ownership of your company to your children after your death, life insurance may be more beneficial than you think, says Bates.

“If you die and you are the sole owner of that business, the value of that business may be subject to real estate tax. You may need life insurance to offset the estate tax if you want to continue the family business or your family farm or something.”

In the case of a partner-owned business, Bates says business partners can write agreements about how to pay, pass, or split business assets if one of the business partners dies.

“Using a sale and purchase agreement,” he says, “you can specify things like, ‘If my business partner dies, I will pay his family $1 million, or half the value of the business at the time of his death.’”

A life insurance policy with your business partner as a beneficiary ensures that they have that money on hand, and that your family gets the financial support they need.

4. Parents of disabled children

Bates says that parents of children with special needs should have life insurance to make sure the costs of caring for their children are covered after their death.

Bates says, “This is one of the biggest reasons to get life insurance that we see out there. If you have children with special needs, you may need some life insurance so someone can help care for or support your child in the long term.”

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