Do I really need life insurance? It’s a question often asked when deciding whether or not to purchase insurance. We often consider several factors to determine if we need life insurance, such as our current financial situation and family members, employment situations, number of dependents, etc. Life insurance can be considered a contract between an individual (the insured) and a life insurance company. In exchange for the premiums paid, the insurer promises to provide benefits, known as the death benefit, at some point in the future if anything were to happen to the breadwinner.
REASONS TO PROCURE LIFE INSURANCE
- TO PROTECT YOUR FAMILY’S FINANCIAL WELL BEING
Insurance is a way to help protect your family’s financial well-being. In most cases, your life insurance policy will stay in effect even if you lose your income or change jobs. If the family’s breadwinner dies prematurely, the life insurance can provide home payments, children’s education, and miscellaneous living expenses until the survivors can support themselves.
If you have children, a spouse, or family members that rely on your income to survive, life insurance can help support them financially if the worst happens. If the primary earnings of your household come from your income and there are no other sources of funds available, you will want to make sure that those dependents are being cared for in some way.
- TO PROVIDE LIQUIDITY
Life insurance can provide you with the opportunity to raise cash from the insurance benefits when you require funds, either for an individual purpose or perhaps for business needs. Generally, there is no restriction on how you use the proceeds from your life insurance policy.
- IT WILL HELP PAY OFF LOANS
If you have outstanding loans, life insurance can help pay them off upon your death. Your spouse or family will not be responsible for repaying these loans, and they’ll also benefit from the additional cash flow. In addition, this may make it easier for them to handle their loan obligations after you’re gone.
- IT IS INEXPENSIVE TO MAINTAIN
When adequate coverage is purchased, life insurance is one of the least expensive ways to provide financial security for your family. In most cases, costs can be minimal in comparison to other financial instruments. You may also want to consider that premiums are fixed when you purchase a policy and do not change during the policy term.
- IT CAN BE CUSTOMIZED
There are several types of life insurance policies that you can purchase. They vary in terms of coverage, exclusions, premiums, and the length of time they remain in effect. With proper planning, it’s possible to custom-design a policy to meet your specific needs as well as those of your family.
- IT CAN BE USED AS AN INVESTMENT
In recent years, the cost of life insurance as a percentage of an individual’s total assets has fallen as more people have begun to see it as an investment. In addition to providing financial security for your family should something happen to you, this type of policy can provide a source of steady, additional cash flow. You can often choose an investment strategy that best suits your needs and goals.
Life insurance is integral to protecting your family’s financial well-being. It provides dependents with the funds they need and helps pay off loans that can be used in emergencies. It is never too early to initiate thinking about life insurance. Whether you are a single individual or have dependents, it can play a vital role in our financial planning. When considering your options for life insurance coverage, be sure to discuss with your agent what type of policy conveniently suits your needs and budget. You want to make sure that those who matter most will be taken care of long after you’re gone.