A life insurance policy is a contract that is entered into with an insurance company. You make payments that are referred to as premiums, the insurance company then agrees to provide a payout benefit to the beneficiary of the policy in the event of the death of the insured person. A life insurance policy can also be thought of as an important tool in financial planning. Here are some of the best reasons to consider buying life insurance.
The replacement of income for dependents is usually the first reason people consider purchasing life insurance. Traditionally associated with parents replacing lost income for their young children, life insurance has many benefits. There are however other instances to consider. How would the change in your financial situation impact your spouse, dependent adults, including adult children, parents or siblings.
Another important reason can be the payment of final expenses. Life insurance can be used to pay for your funeral and burial costs. It can also be used for other debts and medical expenses that may not be covered by health insurance. Estate administration costs and probate are also factors to consider. Rather than your heirs having to shoulder the costs of your outstanding debts at the time of your death they could use the beneficiary payout to pay for those debts.
You can also use a life insurance benefit to make substantial charitable contributions. The naming of a charity as the beneficiary of your life insurance can make a much larger contribution possible than the cash equivalent of the paid premiums of your policy.
Setting up an inheritance for your heirs is an additional reason many people consider. Whether you have other assets to pass onto your heirs or not you can also create a legacy by buying a life insurance policy and naming your heirs as beneficiaries.
You may also use a life insurance benefit to maintain a comfortable and familiar living situation. The life insurance benefit could be used pay off a mortgage and keep your family in the home.
A whole life or universal life insurance policy could be used to create a source of savings. Depending on the type of life insurance you select you may be able to borrow or withdraw a sum at the owner’s request. By making your life insurance premium payment you are paying into a savings plan. Also, the interest that is credited to the policy is typically tax deferred.
We recommend getting an online life insurance quote today, which can help you understand what steps you may need to take to protect you and your loves ones with a life insurance policy. You can also use our term life insurance calculator to help understand the amount of coverage you may need.