Having life insurance might be important, regardless of whether you’re married with children, have a partner, or other family members who depend on you financially.
Your designated beneficiary will receive money from your life insurance policy, also known as a death benefit, upon your passing. When your loved ones need money, it can help them get access to it.
You may better prepare for your family’s long-term financial needs by understanding life insurance. Here are the top 11 reasons to buy life insurance.
Table of Contents
- 1. Protect Your Family Financially
- 2. Replace Lost Income
- 3. Help Your Loved Ones Pay Off Debt
- 4. Help Pay for Future Education Expenses
- 5. Cover Funeral Expenses
- 6. Peace of Mind
- 7. Help Pay Estate Taxes
- 8. Charitable Giving
- 9. Help Your Business
- 10. Can Be Used as an Investment
- 11. It’s Affordable
- Final Thought
1. Protect Your Family Financially
If you pass away, your family could require money to pay for things like your mortgage, educational expenditures, and other bills of daily living. They may be able to maintain their quality of living with the help of a life insurance policy. Some life insurance policies also offer riders, or additional features, that can provide coverage for things like critical illnesses or long-term care.
2. Replace Lost Income
If you die, your family may lose your income and the financial contributions you make to help support them. A life insurance policy can help replace that lost income and provide for your family’s future needs.
3. Help Your Loved Ones Pay Off Debt
Your death can leave your loved ones with not only the loss of your income, but also with debt that you may have left behind, like a mortgage or credit card debt. A life insurance policy can help pay off that debt, so your family doesn’t have the added burden of dealing with it on top of everything else.
4. Help Pay for Future Education Expenses
If you have young children, you may want to consider a life insurance policy that has a rider that provides for their future education expenses in the event of your death. This can help ensure that they are able to get the education they need, even if you’re not there to help pay for it.
5. Cover Funeral Expenses
Your family may have to come up with the money to cover your funeral and other final expenses, like unpaid medical bills. A life insurance policy can help pay for these costs so your loved ones don’t have to worry about them.
6. Peace of Mind
You might feel more at ease knowing that your loved ones will be financially taken care of if you pass away if you have life insurance. The knowledge that they won’t need to worry about these things in the event that something occurs to you can also bring them comfort.
7. Help Pay Estate Taxes
If you have a large estate, your beneficiaries may be responsible for paying estate taxes. A life insurance policy can help pay for these taxes so your loved ones don’t have to worry about them.
8. Charitable Giving
You may want to use your life insurance policy to make a charitable gift. You can name a charity as the beneficiary of your policy and they will receive the death benefit when you die. This can be a good way to make a charitable contribution without having to worry about the tax implications.
9. Help Your Business
If you own a business, life insurance can be used to help your family or business partners keep the business going if you die. A life insurance policy can give them the money they need to buy your share of the business.
10. Can Be Used as an Investment
Some life insurance policies, like whole life insurance, have a cash value component that can be used as an investment. The cash value grows over time and you can access it through loans or withdrawals.
You may be able to borrow against the cash value of your policy to help pay for things like college tuition, a down payment on a home, or other major expenses.
11. It’s Affordable
Life insurance is more affordable than you might think. The cost of life insurance depends on factors like your age, health, lifestyle, and the type of policy you choose. You can get a life insurance quote to see how much coverage might cost you.
There are many reasons to buy life insurance, but ultimately it is up to you to decide if it is right for you and your family. If you have people who depend on you financially, or if you have debt that would need to be paid off in the event of your death, life insurance can be a good way to protect them. Talk to a financial advisor to see if life insurance is right for you.