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Being prepared financially is just as important as physical prepping 101. Those who do not have life insurance and get into an unfortunate disaster often leave their family to deal with many financial issues. If such people have an insurance policy, the benefits from their life insurance will really save their loved ones and preserve the wealth they have built.
There are several reasons why buying a life insurance policy is necessary. Here are our major 5 reasons:
Death can happen at anytime. The cost of funeral and burial can easily reach tens of thousands of dollars. Families often struggle to pay the final expenses, which create blunders and put families into debts.
All parents want their children to be well-taken care if something should happen to them. Without enough financial resources, it is not possible. Getting an insurance policy can put you at ease and give assurance that they can afford to have the proper education and health support.
If you died, would your spouse be able to maintain the same standard of living with only their income? This is one of the primary motivators to have insurance. A good rule of thumb is getting life insurance coverage that’s 10-12 times your annual income, but it depends on your individual financial circumstances.
While not all states have estate tax, those in states that do know how excessive it can be. In this regard, having a potential insurance policy instead of paying taxes is a significant step to get rid of threatening funds or assets developed for retirement.
Getting a life insurance policy can help your family pay off your debts without selling any of your assets or theirs. The Consumer Protection Bureau has outline the following tips when it comes to a deceased person’s debts.
Now, there you have the major benefits of getting a life insurance policy, here are some additional things to consider.
There are two main options when it comes to the period of time for life insurance; term, which is for a set duration or a lifetime, which includes whole and universal life. Some people only need insurance for a specific period of time like when your kids are young or you have a lot of expenses you wouldn’t want to leave your spouse to deal with, then consider term. If, however, you need life insurance for as long as you live, you may want to go with a lifetime policy.
Consider how much insurance you need. Here are the key components to factor in:
A beneficiary is the person or entity who will receive the proceeds of your life insurance policy. When choosing a beneficiary, avoid naming a minor child as they will not be able to receive funds without a trust.
You should always discuss your personal financial decisions, like life insurance, with your trusted financial advisor who can help you make sound decisions and choose the best life insurance company and policy to suit you.