Craig purchased life insurance policy to help his partner with debts i.e. house mortgage, car installments, and other bills. You can see why buying a life insurance policy is so important! It gives peace of mind just in case you die knowing that your loved ones will be financially safe.
Many people don’t know why they need life insurance. Successful financial experts recommend everyone take it out, but what does it have to do with your personal situation? It’s not a fun purchase, but it is a very important one for your financial plan.
Our handpicked five reasons why life insurance is a good idea
1. To cover your final expenses
Many people don’t know the many reasons why they should buy life insurance, many financial experts recommend it. And we all know thinking about life insurance isn’t fun. It’s not a fun purchase, but it’s an important one. In order to take care of your obligations, buy a final expense insurance policy. This way, your family will have a lump sum death benefit to take care of all the “debts” you have to leave behind.
2. To replace your income
Getting life insurance is a tough decision. You need to think about what would happen if you died and your job income went away. Luckily, there are several types of policies. A lot of people (and financial professionals) recommend a policy that would replace a few year’s worth of your salary every year. If you pass away during your working years, life insurance can be used to replace the lost income and help with the quality of life.
3. To pay off your debts
Death is never what you want to think about, but it’s important to be aware of reality. If you’re single and have credit card debt, student loans, and car loans, then when you die, your family will be obligated to pay them off. If you have a family, then you are also probably still paying off a mortgage or other debts.
Life insurance is a great financial product that exists to provide peace of mind in the event of death. If you pass away, life insurance can help your family address debts and other financial concerns. It’s also a good idea if you’re looking to leave your family in a good position financially. In addition, the insurance itself is a solid investment for your loved ones.
4. To address estate taxes
When people retire, many mistakenly think they don’t need life insurance anymore. In truth, if you have a financial position that may result in estate taxes at your death, you’ll want to address those taxes as soon as possible. If you don’t have enough liquid assets to address those taxes, you should contact an estate planning attorney as soon as possible for guidance. One way to deal with this problem is to have a life insurance policy in place for your beneficiary. This will give them resources to cover these taxes, which may be difficult otherwise.
5. To be used if you have significant health issues
It’s always a bad day when you get diagnosed with an illness (specifically, cancer). But what if your life insurance policy included sick riders? There are three different types of riders: Chronic, Terminal, and Critical illness. These appendages to your insurance policy allow you to access part of the death benefit should you be diagnosed with something like cancer, heart attack, or stroke.
With insurance, you can pick between three options. You can accelerate the death benefit, living benefits, or both. Selecting to accelerate the death benefit lets you access a pool of money that could help you pay for your living expenses.