4 minute read
Ten reasons to buy life insurance
Life insurance is one of those things that everyone hopes they won’t need. When you are young, fit, and healthy, life insurance is probably the last thing on your mind. But the unexpected can happen to anyone. Life insurance is one way that you can take care of those you leave behind. But providing your loved ones with financial security is only one of the reasons why you need to consider buying life insurance. Here are the 10 main reasons why people purchase life insurance.
1. Security for your loved ones
The main reason for buying life insurance is to provide security for your loved ones. If you are the primary income earner and you die suddenly, then the loss of your income would be disastrous for your family. A life insurance policy will help ensure that your partner and children have money to pay the bills and continue living in the family home.
2. Repay debts
Unfortunately, when you die, your debts will not be written off. Your spouse will be left with the responsibility of making payments on mortgages or loans that you co-signed. Your creditors may attempt to collect debts from the proceeds of your estate, which will reduce the value of the legacy you leave for your children. Life insurance will provide the funds for those you leave behind to settle any outstanding debts in your name.
3. Pay for your funeral
Even a simple funeral can cost thousands of dollars. If you have life insurance, the cost of your funeral will be covered, leaving one less thing for your family to worry about at a difficult time. You can also choose to prepay for your funeral. Getting life insurance means your family won’t have to fundraise for your funeral.
4. Cover estate and inheritance taxes
The people who inherit your estate may face hefty inheritance and estate taxes. These taxes create added worry for the people who inherit the assets. Life insurance will help to cover the cost of tax bills your loved ones receive. Unlike other income, life insurance proceeds generally are non-taxable.
5. Provide care for dependent relatives
It is not only your spouse who will benefit from your life insurance. If you provide care for aging parents or young children, life insurance will ensure that the care continues after your death. Even if you are single, life insurance will help the people who rely on your financial support.
6. Pay for your children’s education
Most parents save to pay for their children’s education. But if the worst happens, you may not have saved enough. A life insurance policy will help ensure that your children can have a quality college education, even if you are not around.
7. Build a cash reserve
If you opt for whole life insurance, your policy will have a cash value. So, as well as providing for your family if you die, you will also build up a cash value. Most whole life policies allow you to withdraw a limited amount of cash while retaining your life insurance. The cash reserve can be helpful if you find yourself faced with a financial emergency. Most cash-value policies, like whole life policies, can also be used as collateral against loans.
8. Protect business partners
If you are involved in a business partnership, life insurance will help ensure that the business can continue without you, ensuring what you have built is not lost. Life insurance that is payable to your business partners will allow them to purchase your share of the business from your heirs.
9. Peace of mind
Being the primary breadwinner of a family is a big responsibility that can weigh heavily on your mind. Having adequate life coverage will give you the peace of mind that your loved ones will be taken care of after you have gone.
10. Life insurance is affordable
Life insurance premiums are affordable for most people. The premiums you pay for life insurance will depend on your age, health, and lifestyle choices like smoking. And, of course, the premium you pay will depend on the value of the coverage you need. A healthy, relatively young person could insure their life for as little as $1 a day.
