5 Reasons You Need To Know About Life Insurance

In this article you will know about reasons for life insurance. Because of the financial cost involved, not all consumers are convinced that they need life insurance.It can be tough justifying the additional expense of a policy on top of all the other bills you already have to deal with each month. But no matter what your age or stage in life, it is important to be insured. Here are five reasons why.

  1. Replacing Lost Income

Life insurance can replace the earnings that cease upon the death of the insured, helping survivors move forward financially.

  • According to State Farm, it can be challenging trying to maintain a standard of living after the death of a wage earner. This is especially true in households with family members that have special needs.
  • The income replacement provided by a life insurance payout helps beneficiaries deal with ordinary daily living expenses, from utility bills to car payments.

The income replacement capability of life insurance is also extremely helpful for survivors dealing with a mortgage payment.

  1. Protecting Your Mortgage

Mortgage protection is one of the primary benefits of term life insurance in particular. Many policyholders purchase term coverage as asset protection, aligning their policies to coincide with the payment on their mortgages.

Most major insurers emphasize mortgage protection as a primary reason why consumers should obtain life insurance. Nationwide, for example, points out that the payout on these policies can be used to pay off a mortgage in one lump sum or to help beneficiaries keep up with payments as they come due.

  • Many of Nationwide’s life insurance customers choose policies with terms designed to expire when their mortgages are paid off.
  • Like many major providers, Nationwide also offers decreasing term insurance, with a death benefit that decreases over time along with mortgage balances. Decreasing terms typically expire once the mortgage is paid in full.

Mortgage protection is a major concern for most consumers, especially given that it is the largest single purchase the vast majority of people will ever make. Protecting the money you have tied up in your mortgage is crucial, and a quality life insurance plan will help you do just that even in the event of your death.

  1. Financing Your Child’s Education

These days, post-secondary educational expenses tend to be second only to mortgage expenses in terms of the average amount of money consumers spend on them. Financing a child’s college or university expenses takes years of diligent savings.

  • One of the great benefits of life insurance is that it can provide a lump sum of cash to help defray the cost of education if something happens to the insured.
  • The educational expense benefit associated with life insurance is one more example of the many ways a quality policy can help families keep up their standard of living following the death of a loved one.

Life insurance is often thought of as “forced savings,” a term that refers to the fact that investment in these plans provides the funds needed for families to deal with certain expenses after the death of the insured by forcing them to set money aside and prepare ahead of time. Aside from mortgages and educational expenses, estate taxes are some of the most difficult financial issues survivors have to deal with.

  1. Paying Estate Taxes

State and federal estate taxes can seriously hamper the financial outlook of entire families. Since cash payments are normally required to pay off an estate tax, life insurance plans can help set up families to prepare ahead of time and be in good shape to deal with these circumstances when the time comes.

  • AAA Life points out the importance of preparing ahead for estate taxes. Having a solid policy in place helps families more effectively deal with these expenses.
  • This makes it much easier for survivors to donate to charitable organizations, replace pension income, and make other important financial moves.

It is tough enough to deal with the loss of a loved one without the additional difficulty of paying estate taxes. Life insurance helps guarantee that your family will be in good shape to settle your estate, including these tax bills and any additional unpaid debts, when you are gone.

  1. Dealing with Final Expenses

Funerals and memorial services are usually hard on surviving family members. There is no reason to compound this difficulty by adding in unnecessary financial stress. Life insurance can provide beneficiaries with the funds needed to take care of funeral and burial costs as well as other final expenses.

  • In some cases the last days of a loved one are marked with costly medical care and additional related expenditures.
  • Quality life insurance helps families deal with these expenses and allows them to focus their attention on the grieving process.

There are a range of providers in the industry selling and servicing life insurance policies in all parts of the country. Compare pricing and policy offerings from leading insurers and choose a plan that fits your budget and matches your investment goals.

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