Life insurance is an important part of a well-rounded financial picture. That’s because it provides financial protection for loved ones in the event of your untimely passing, and can also provide other benefits while you’re still alive. Let’s dive deeper into the importance of life insurance and 5 great reasons to consider getting a life insurance plan.
Replace Lost Income
If you’re the primary breadwinner or caretaker for your household, replacing your lost income would be a primary concern for your family when you’re gone. And when family members are already grieving, the last thing they’ll want to do is figure out a way to get bills or childcare paid.
The general recommendation for a life insurance policy is a death benefit that pays out 10 to 12 times your income. That means your family will have a nice buffer to figure out their next steps before they need to find new ways to make ends meet.
Build Cash Value for Retirement
While term life insurance policies provide trade a premium for a death benefit that expires once the term ends, a permanent life insurance policy gives the option to accrue cash value. And this nest egg financial debt relief solutions can be used for a variety of reasons.
You can use a whole life insurance policy to set aside money for retirement. And since the money grows tax-deferred, it can turn into an even larger amount by the time you want to use it. Other options to use the cash value include paying the policy’s premiums, increasing the death benefit, or taking out a loan.
Due to the complexity of whole life insurance policies, working with a life insurance agent or financial or tax advisor to help you navigate the specifics can be helpful.
Pay for Outstanding Debts
You may accrue certain large debts throughout your life, like a mortgage or business loan. And if you pass unexpectedly, your family or co-borrower will be left to settle up the balance due. A life insurance policy can be used as security to ensure the debts are taken care of in your absence. But that also means you’ll need to be certain to get a policy in place that’s large enough to cover the debt balance.
Leave a Legacy
Especially for younger people, legacy planning probably isn’t a thought that crosses your mind. But the truth is that after you pass, you may want to leave a financial legacy for people in your life, which may include a spouse, children, or business partner. And that gift of your legacy could help fund a child’s education, support a spouse in pursuing a new dream, or give a business partner new opportunities.
Peace of Mind
Last but certainly not least, a great reason to consider getting life insurance is for peace of mind. This applies to both you and your beneficiaries, who can rest easier knowing finances will be taken care of. At a time when family members are already strained by grief, giving them financial leeway can go a long way in helping them get back on their feet faster.
The Bottom Line
Life insurance can be an important part of a financial plan in helping necessary financial tool to protect loved ones and provide for them after you’re gone. If you’re still on the fence about buying a policy, think about how it can be used to replace lost income, build cash value, pay for outstanding debt, leave a legacy, and give you and your family peace of mind. And if you are interested in getting life insurance, research your options and connect with a reputable life insurance company to help you lock in the right policy at an affordable rate.
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