8 Reasons You Should Have Life Insurance
Life is precious and no amount of money can match its value. If cars and houses are insured, then your life should be, too. That's because life is unpredictable, and the risks are always there. This doesn't only apply to your life, but also to the life of your loved ones and family. To ensure that life for your living dependents will still be easy and comfortable even when you pass on, consider purchasing life insurance, which will provide a safety net for both your family and business as well.
Some may think that life insurance is for old or ill people only, but that isn't true. In fact, the younger you start with a policy insurance, the cheaper the premium contribution. Eventually, as you age, your life insurance becomes significantly higher and the premiums are up, which is why it's good to start young. On the other hand, others see life insurance as an investment and a source of funds when their retirement years arrive. Either way, life insurance will save you from stress and worries.
That said, here are the top reasons that you should have a life insurance plan:
1. Protect Your Family
The most important thing to consider is the welfare of the family in case death comes to the breadwinner. When the policyholder dies, the dependents will be provided with a lump sum for assistance. The amount of money will depend on the type of purchased insurance. To understand this better, here are the common types of life insurance:
- Term Life Insurance: This is the simplest and the cheapest form of life insurance. The lump sum can be given only to the beneficiaries of the policyholder if death occurs during the term of the policy, which usually runs up to 20 years.
However, if the policyholder managed to outlive the term, no amount of money will be claimed. That's why most policyholders opt to sell their insurance to cash it out or convert the term policy into permanent life insurance.
- Whole Life Insurance: It's also called permanent life insurance. The policy automatically pays a death benefit when the policyholder dies. This type of insurance is more expensive compared to the term insurance policy because it has an investment component. Also, a whole life insurance policy has added benefits compared to term life insurance.
Both types of life insurance provide benefits to the policyholder. However, some policy applicants get confused when comparing whole vs term life insurance. Clearly, whole life insurance has a longer length of coverage, more benefit claims, higher premiums, and greater cash value compared to a term life insurance policy.
2. Dealing With Debt
Leaving debts behind to the dependents can add stress to an already grieving family. Debts like a car loan, personal loan, credit cards, educational loan, and other high-interest loans can be paid when the dead person is covered by the policy.
However, when debt is too large to manage, some policyholders choose to sell their term insurance plans. There is an equivalent sum of money for the sold plan and death should not be the answer to debt problems.
Unfortunately, the living dependent can no longer claim for future benefits when the insurance plan is already sold.
3. Buying Insurance Is Cheaper When Younger
If you have dependents or have co-signed a loan, you need to consider buying a life insurance policy. When you're single and young, the average costs or premium are lower compared to one who's old and married. That's because insurance companies look at the possible risks of the policyholders.
Further, being young and healthy gives you a greater chance of passing the qualifications set by the insurance company. In addition, you can avail the best offer on your life insurance policy.
4. Supports Your Business
Some types of insurance policies support business partnership. For instance, if you own a business and your partner wanted to purchase a portion of the business, then you may decide on a buy-sell agreement.
When one of the key employees or CEOs in a company dies, the insurance claim will be given to the deceased partner's beneficiaries, without getting this support from the company. The company will then be saved from the expense of death benefit assistance for the key employee.
5. Helps Achieve Long-Term Goals
Various types of policies will give the policyholder a diverse investment option. For instance, the policy involves a long-term goal like buying a home or planning for retirement funds. This opportunity can be realized only when the policyholder purchases a whole life insurance. The insured can enjoy the contributed premiums and death is not an option. That's how life insurance protects the family's future.
6. Supplements Your Retirement Goals
With a permanent life insurance plan, the policyholder can enjoy a regular stream of monthly income. These monthly benefits can support other investments or businesses that might fall short.
However, a permanent life insurance plan is quite expensive over other types of plans. It's important to have a proper assessment of the capacity of the applicant to pay for this particular insurance plans.
7. Peace Of Mind
It can be reassuring to a policyholder to know that their living beneficiaries will be provided for with cash assistance if they unexpectedly pass on. The insured don't have to worry about medical bills, credit card loans, or car loans because it will be paid for. This can also give comfort to the grieving dependents as life can still be manageable after losing a loved one.
8. It Can Pay For Funeral Costs
Most life insurance policies include funeral costs and other related expenses. Recently, ordinary funeral expenses would range from $7,000 to $10,000. This amount can be retained in the pockets of living dependents with an insurance policy coverage.
The benefits listed above are some of the best reasons why you should have life insurance. Applying for life insurance for the first time can be complicated and overwhelming, hence it's important to check the financial stability and credibility of the insurance company. Before purchasing a policy, look for trusted and reliable financial advisors since they can serve as a guide to life insurance.
Invest In Yourself
Life insurance is a major decision and therefore needs extensive planning and research before deciding to purchase a policy. A huge amount of money is at stake so make sure your investment is safe. Look for reputable insurance companies and seek a financial advisor's expert advice.