In my experience, I see people incredibly busy about the business of their day to day lives and obligations. And, thus woefully unprepared for a catastrophic life event that results in their or a loved one’s premature death. Oftentimes, folks don’t stop to think about whether they need it or consider the financial implications to family or partners if they died, and if they do, they may just figure it’s an unnecessary expense cause “I’m not going to die soon.” The truth is, if there are people in your life who depend on you and your income and would financially suffer if you passed away, you need life insurance. Good insurance planning can keep an emotional loss from being worsened by a devastating financial crisis.
Here are 10 reasons why you should have adequate life insurance:
Replace Lost Income - Life insurance provides financial security after you pass away for your family and loved ones. If your loved ones rely on you for your income, then it is even more important to have enough coverage to help them pay the bills.
Pay Off Debt – After you die, your debts do not disappear. If you have a co-signed mortgage or loans, your spouse could become financially responsible to handle those payments. If they do not have enough resources, creditors might try to collect from your estate. Life insurance takes care of these lingering financial responsibilities.
College Planning – While life insurance may not be anyone’s first choice to pay for their child’s education, it does add to your savings. Money from the life insurance policy can help your child get through school or take care of their student loans if you passed away suddenly.
Business Planning – If you own a business, life insurance is essential to secure your hard work from going to waste. Additionally, if you are in a partnership, you do not want to leave all the financial responsibilities for them to handle.
Cover Burial Expenses – The average funeral cost in the state of Washington is just over $8,000. Pre-payment is possible, however, the majority of people do not pre-pay and it carries some additional risk. Life insurance can guarantee that your beneficiaries do not have any burden regarding your burial costs.
Estate Taxes – Assets you give away after you pass can incur estate and inheritance taxes and those taxes are due within 9 months of your death. Evaluating your estate’s potential tax exposure and the makeup of your assets now, can help determine whether, and how much, life insurance would be appropriate to help pay such taxes.
Coverage is Affordable – A common excuse for not purchasing life insurance is cost, however, coverage is quite affordable for most. Term life insurance is cheaper than whole or universal, and if you are younger and healthier, your premiums are lower. There are a lot of options to affordably meet your life insurance needs.
Peace of Mind – The future of all our lives is uncertain and having life insurance prepares for any possibility. It can make it easier for you to sleep at night knowing your loved ones have financial protection if anything were to happen.
Build Cash Value – Whole life insurance is an alternative to term life insurance that provides permanent coverage at premiums that do not change. Whole life insurance allows you to accrue cash (savings) over time that you have access to, which can add more cushion if a financial emergency were to occur. It is more expensive than term insurance.
Diversify Investments – Universal life policies can be used as an investment tool as they are tied to a specific investment product. Dividend payments are distributed to policyholders based on the investment’s performance; however, these policies can incur higher risk.
If you have any questions about your current life insurance plan, reach out to me I would be happy to talk about your current coverage and additional options in context of your overall situation.