Buying life insurance is an important financial step. It’s not a decision to be made lightly.
It’s one that should be made as soon as possible, regardless of your age or health. It’s cheaper to buy a policy when you’re younger and healthier than it is to wait until you’re older and sick.
1. Protects Your Family’s Financial Future
Life insurance is a financial product that pays out a specific sum in the event of the policy holder’s death. This cash benefit can be used to pay off debts, help cover funeral expenses or even replace years of lost income.
Buying life insurance for your family is essential for many reasons. If you are a breadwinner, your policy can help replace your income and ensure that your loved ones have the support they need to make ends meet.
If you have a home that you share with your spouse, life insurance can provide a lump sum to help pay off the mortgage if you die. It can also ensure that your spouse can continue to maintain the property in your name and that your children aren’t left with a burden of debt.
2. Provides For Your Dependents
Life insurance provides financial protection and peace of mind for your loved ones. It may also help them pay off debts you leave behind, such as a mortgaged home or car loan.
Buying life insurance can help your dependents cover day-to-day living expenses and provide them with enough money to cover funeral costs, if needed. The amount of coverage you need varies by your specific situation and depends on the number and ages of your dependents.
Generally, dependent coverage can be added to an existing group life insurance policy or purchased separately as an individual policy. These policies vary in terms of the number and types of eligible dependents, and they have certain rules that must be met.
3. Ensures Your Will Is Finalized
Creating a will is a legal document that ensures your assets are handled the way you wish after you die. Whether you hire a lawyer, estate planner or financial planner to create one for you or you create it on your own using an online template, it’s important to get your will finalized so that your wishes are known and your loved ones can be taken care of.
Life insurance is an investment that provides money, called a death benefit, to your beneficiary after you die. This money can be used to pay off debts, cover funeral costs and provide for your family’s daily expenses.
4. Covers Funeral Expenses
Life insurance policies can cover a range of expenses, including funeral costs. This means that your loved ones won’t have to worry about the cost of your final arrangements.
In addition to life insurance, burial insurance is also an option. It’s a type of permanent life insurance designed to pay for end-of-life expenses such as funeral costs and unpaid medical bills.
Burial insurance doesn’t require a health exam, so it’s easy to qualify for. However, it’s not for everyone and is usually capped at a small amount of money. This is one reason why people tend to choose life insurance over burial insurance.
5. Helps Pay Off Debts
One of the main reasons people buy life insurance is to prevent their heirs from being left with debt when they die. Credit card and other loan repayments are common financial burdens that can make life difficult for families.
Thankfully, your life insurance policy may be able to help you pay off these debts. If you have a whole life or universal life policy that accrues cash value, you can take out a loan against the cash value of your policy to pay off your debt.
Using your life insurance policy to pay off your debt can be a great way to free up cash now and save on interest in the future. But it’s important to talk with an insurance professional before deciding whether or not this is the right option for you.
