There are many people who argue that life insurance is a scam; after all, if you buy term insurance, you may lose your premiums if death doesn’t occur within the term of coverage. Others simply live to a ripe old age, paying premiums for years on end. A popular argument is that you yourself won’t benefit from life insurance. All of these so-called “issues” can be debunked, and should not be a roadblock to exploring the value of life insurance–not only for you, but for your family members and employees as well.
There are some very good reasons you should consider life insurance, including the 5 reasons on this list.
5. Protect Your Loved Ones
Those who are left behind after a death often struggle with the departed’s passing. Depending on their relation to the deceased, they may also struggle financially. A spouse, for example, may lose his or her livelihood and dependent children could also face economic hardship.
Life insurance coverageis the only way to guarantee that you will be able to provide an income for your spouse, dependent children, or an inheritance for your heirs. Life insurance coverage can provide you with peace of mind knowing that your loved ones would be cared for if the unthinkable should happen. Look at life insurance as a way to ensure that your family will not lose their current standard of living after you are gone.
4. Cover off Debts
Many people today rack up a wide array of debts—credit cards, mortgages, cars, business loans, and more. But few of us give much thought to what happens to those debts after we pass away. In many cases, debts will be shifted onto the next of kin—such as a spouse or child. When people talk about leaving a legacy, a legacy of debt isn’t usually what they have in mind! Life insurance coverage can pay for your debts, ensuring that your loved ones don’t need to shoulder that financial burden after your passing.
The cost of funerals and other arrangements, and estate taxes are also concerns. All too many people incur additional debt in order to pay for funeral arrangements. Others may go into debt attempting to cover the deceased’s estate taxes. Life insurance coverage can help your loved ones avoid this unfortunate situation. Average funeral and taxes can be in the neighbourhood of $25,000, which is common coverage from your group insurance.
3. You Probably Don’t Have Enough
Perhaps you already have a life insurance policy offered through your employer. That’s a great start—but it’s probably not enough. You’ll likely want to look at an additional policy.
Why? Most employers offer one to two times your annual salary or a low lump sum payment as the payout for your coverage. While that’s better than nothing, it probably won’t suffice if you have debts—such as a mortgage—or children who will need to be provided for in excess of a year.
2. You Get a Better Rate If You’re Younger or Healthy
If you understand how insurance premiums work, you’ll recognize instantly why younger people get a better deal when they take out a life insurance policy. As a parent, you save for education, or even a wedding, and consider helping your children with a 20 pay whole life policy, which they can carry with them for life. As people get older and apply for new life insurance, it becomes more likely that the insurance company will have to pay out the policy, which is why they charge higher premiums on new policies.
This is also true if you wait until you are ill to take out a life insurance policy—if you can get a policy at all at that point. In other words, the best thing you can do is get life insurance coverage while you’re young and healthy—or at least as soon as possible. If you have a known health issue and don’t yet have a life insurance policy, contact a trusted advisor and be honest with them; they’ll know the best path forward to ensure you are able to protect your family.
1. Plan for the Future
Most people dislike life insurance because it’s connected with death; however, it can also be designed as an investment. If you’re in a comfortable position, with your debts paid for and generous retirement funds accounted for already, you might put your life insurance coverage to other, strategic uses. In the event of death, it can be used to create a legacy after you take care of your debt obligations and your family members—perhaps a donation to a favourite charity or your alma mater. During your lifetime, you can put the coverage to another end by cashing out the policy (careful: there may be penalties) in order to help fund your retirement or to buy out a business partner.
While life insurance is certainly not a one-size-fits-all protection and needs to be carefully considered, it’s a benefit that comes into play when it matters most for you and your family.