In the United States, 78.6 years is the average life expectancy. However, the truth is, very few people know when they’re going to die. Instead, death often happens suddenly, and without warning.
We don’t want to get you down, but we do want to help you plan! By taking the time to find the right life insurance policy, you can give your beneficiaries a bright financial future. There are also policies out there that can help you build equity that you can use in your lifetime.
So just how important is life insurance in the end? Read on to find out all about why life insurance is one of the most important things for you and your family.
How Important Is Life Insurance?
If you’re wondering, “how important is life insurance?”, it’s probably because you don’t know everything life insurance can do. Life insurance is more than just money, it’s a way of maintaining a sense of normalcy in life.
If you have young children at home, the need for a policy becomes even more important. Can you imagine what it’d be like to leave the financial responsibility of your kids on 1 person?
After your death, if your loved ones aren’t able to make ends meet, life insurance can help replace your family income. The non taxable funds can also help cover mortgages, personal loans, and so much more.
Leave an Inheritance
You don’t have to be a millionaire to leave an inheritance behind. If you don’t have a lot of assets to pass down to heirs, you can build your inheritance with a life insurance policy.
First, you’ll need to purchase a life insurance policy, and next you’ll name your heirs as beneficiaries. For example, let’s say you have 2 children. After purchasing your policy, you list both kids as the sole beneficiaries after your death.
Now, both of your children will have a strong financial future ahead of them. You’ll be creating the foundation for your kids to cover their needs, long after your gone.
Dealing With Debt
Another one of the reasons to get life insurance is to help cover your debts. Picture it. Immediately following your death, your family has to scramble to cover your financial liabilities. Auto loans, personal loans, credit cards, and home loans, and other outstanding debts, are now a burden they have to carry.
While it’s not pleasant to think about these things, it’s an unfortunate reality of life. Luckily, with the right policy in place, you’ll be able to spare your loved ones the difficulty of dealing with your debt. Instead, they’ll be able to focus on recovering emotionally, instead of financially.
Employer Policies Don’t Last Forever
Do you already have some type of life insurance policy through your employer? While it’s great to have coverage through your place of work, this isn’t enough. Instead, you should think of your job’s life insurance policy as bonus coverage.
Once you retire, your employer will no longer be responsible for covering your life insurance needs. The same holds if you’re laid off, fired, or if you quit. YOu and your family will be completely exposed, without any coverage at all.
Instead, you’ll need to invest in a personal life insurance policy. A personal policy will follow you after retirement, guaranteeing your loved ones are always covered.
Finding the Right Policy
Before you can purchase a personal policy, you’ll first need to decide what type of coverages you need. You’ll want to make sure you choose a policy that will provide for your family, while also fitting within your budget. Luckily, today it’s easy to get a life insurance quote, to see what policies would be a good fit.
Benefits of Term Life Insurance
By now you’ve probably heard the words “term life insurance” and “whole life insurance”. A term life insurance policy is one that provides coverage for a certain amount of time. If you pass away during the term, your beneficiaries will receive the payout from the policy.
One of the best parts of getting a term life insurance policy is that it’s incredibly affordable. They’re less expensive since the policy itself has zero value, unless you pass away during the term.
If you don’t have any life insurance coverage right now, and you’re working on a budget, try getting a term policy. This way, you’re family will have immediate coverage if the worst were to take place. Later on down the road, you can look into getting a more comprehensive whole life insurance policy.
Benefits of Whole Life Insurance
Whole life insurance is a worthy investment since the coverage lasts for the duration of your life. You may also hear people refer to whole life policies as traditional or permanent life insurance. These policies are also helpful since they build cash value over time.
Unlike a term policy that’s only valuable upon death, whole life insurance has value even while you’re alive. IN a way, your whole life insurance policy is similar to a savings account. Once the policy has enough value, you can look into investing the savings.
Policyholders also have access to their saved funds under whole life policies. You’ll have the option to withdraw funds, or borrow against them whenever necessary. Finally, as long as you maintain your premiums, if you pass, you’re beneficiaries will receive the full value of the policy.
How exactly can you build value with your whole life policy? First, you’ll need to make more payments than the scheduled premium requires. Next, you can reinvest dividends into the cash value and profit from the interest. Now, the cash value of the policy will be a source of equity you can enjoy.
Pay Estate Tax
Estate taxes are notoriously high for properties of a certain value. Considering that not everyone has liquid assets, it may be difficult for a spouse to pay off the taxes after their partner dies.
Luckily, having a valid life insurance policy means your beneficiaries will have the funds they need to settle any estate taxes you owe. An additional benefit is that the funds from your policy will be non taxable (as an income).
All you’ll need to do is meet with a financial advisor, to make sure your coverage is high enough to cover estate taxes. Every few years, if your estate grows, your advisor will suggest you also increase your coverage amounts.
Live in the Moment
How important is life insurance? Now, you know it’s incredibly important, even if you don’t have a lot of assets.
We hope our article was able to highlight at least 1 benefit about life insurance that you didn’t already know. If you want to truly live in the moment, instead of worrying about the future, get a life insurance policy today.
Are you ready to find out about more ways to get ahead in life? For more articles like this, go ahead and check out the rest of this site.