Why You Need Life Insurance

Why you need life insurance

Insurance helps protect the things and people that are important to you. Auto and home insurance protect a couple of the most valuable assets you own. However, you are most treasured by those who rely on you.

While most of us don’t want to think about what will happen after we are gone, we do want to make sure those we care about will be taken care of. Life insurance helps to make sure they will be financially secure, and there are several situations where it can play a key role in leaving a meaningful legacy.

Your Family

The most obvious reason people buy life insurance is to provide for their family and loved ones. It not only helps to cover your loss of income for your family and help them maintain their standard of living, but it also helps cover your funeral expenses or any unpaid debt remaining after you pass away. This is especially critical when it comes to significant debts, such as private student loans or a mortgage.

Loss of income is not the only loss your family may experience. Life insurance is also crucial for stay-at-home parents as well. If something happened to them, the remaining parent might have additional expenses for roles that were previously taken on by their spouse, such as child care, meal preparation, or home cleaning and maintenance.

In addition to the memories and stories you will certainly leave behind, a life insurance policy can give you a long-lasting family legacy. Leaving an inheritance can provide for the needs of your loved ones and set them up for a solid financial future. If you have little or no assets to leave behind, life insurance can ensure your heirs will receive an inheritance. However, if you have a good amount of assets you are leaving behind, it can help to pay estate taxes and safeguard the full value of your estate for your family.

Your Business

Not only can life insurance help protect your family, but if you are a business owner, when you pass away, it can help ensure the future of the company you have built. It can help provide a cushion for your successor, or the orderly transition to new ownership. Some business partnership agreements use life insurance to transfer ownership to the remaining partner(s), and the insurance payment compensates the family of the partner who passes for their share of the business.

The loss of a business owner or other key person can be a challenging time for any business. Life insurance can also help protect the business from benefits paid to the family of the employee or lost revenue which may result from the loss of that key employee.

You can also borrow against the accumulated cash value of a whole life insurance policy to help your business weather an unstable economic environment, pay unexpected expenses, or provide supplemental cash flow.

Your Charity

For those who are passionate about certain nonprofits or other charitable organizations, life insurance can be a way of supporting the cause. In lieu of an annual gift to the charity, the donor can pay a relatively small annual premium, and the benefit to the charity could exceed what the donor may possibly give them. For example, paying a few hundred dollars a year in life insurance premiums could result in a payment of a couple hundred thousand dollars to benefit the charity.

If you have outlived the need for your life insurance policy, you can also name a charity as the beneficiary of your policy. Naming a charity as the beneficiary can lower your taxable estate and ensure the charity receives the full value of the policy, since these proceeds are free from federal income taxes, estate taxes, probate, and administrative costs. If you want to ensure your wishes that the gift goes to the charity (especially sizable gifts), the contractual nature of the life insurance policy makes them less contestable by heirs.

Your Piece of Mind

A person can never be replaced by any amount of money, but life insurance can provide protection from life’s uncertainties. Buying life insurance can bring valuable piece of mind to you, your family, and others you care about. You will be able to worry less about what might happen and whether or not your loved ones will be taken care of when you are gone.

Your Opportunity Cost

An unfortunate fact of life is that every day we grow closer to the end of it. So, the older you get, the cost of life insurance is almost guaranteed to increase. If you happen to develop a chronic medical condition, the premiums could grow substantially, or worse, you may not be able to get life insurance. Buying the right amount and type of life insurance early in life can offer significant long-term benefits and ensure you have protection.

Do not wait to explore what types of life insurance available and the amount of coverage that may be right for you. There are many different options available, and we can help you select one that offers you the most comprehensive protection for the price.


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