Life Insurance
Life insurance can often be confusing. Many people know what it is, but they aren't really sure why they may need a policy. This can lead to people putting off getting a policy or, worse, not getting one at all.
If you want to help ensure your family is going to have income and be able to pay off debts after you’ve passed, then life insurance is a very important consideration.
“If there is at least one person in your life that financially depends on you (spouse, children, etc.), then you must have 8–10 times your annual income worth of term insurance in place."
-Dave Ramsey
Why is Life Insurance Important?
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Provide for lost income
One of the primary reasons people get life insurance is to help ensure their loved ones won't face financial hardships if they pass away unexpectedly.
If you're married and have kids, this can matter a lot, especially if you're the primary breadwinner. Without your income, your family might not be able to afford your mortgage or cover tuition costs. Your life insurance death benefit can help pay for these.
Life insurance is important even if you don't have a spouse or children. If you have a partner you share finances with, for example, they might not have the funds to cover the bills that you normally split. -
Cover Funeral Expenses
Funerals can be expensive. Dealing with this financial stress can add to the emotional stress your family might experience. Your family could use some of the death benefit from your life insurance policy to help pay for these costs. To do this, the beneficiary of the policy could direct some of the death benefit to the funeral home, or they can pay out-of-pocket and use the death benefit as a reimbursement for these expenses.
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Help cover bills and debts
Certain types of debt don't go away when you pass away. This means your loved ones may have to use money from your estate or sell off other assets to cover them. This could leave less money to pay for expenses.
Life insurance can help your loved ones pay for any debt you leave behind, including credit card debt, business debt, personal and/or educational loans and mortgage debt. At a time when your loved ones are dealing with your loss, life insurance can help ease some of the financial burdens they may experience after your passing. -
Leave An Inheritance
Even if you don’t have any other assets to pass to your heirs, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries. This is a great way to set your kids up for a solid financial future and provide for any monetary needs that will arise.