Ever sat and asked yourself, why do I need life insurance? You’re not alone!
Life insurance is that one thing that everyone should have, but most people don’t. In most cases, people don’t understand why they should have it. And unless it’s sold to them by a friend who is a salesperson in an insurance company, they hardly buy it.
It’s easy to put off the idea of buying a life insurance policy when you’re young and healthy. But, the more you wait, the higher the chances that something will happen in your life and find you without coverage.
Here are three main reasons why you need a life insurance policy now:
1. To Replace Lost Income
If you pass away and you were your family’s breadwinner, you’ll leave them in deep trouble. It’s good to consider what would happen in such a scenario. Your family may no longer be able to afford rent, food, and school fees if they solely relied on your income.
With a life insurance policy, you can give your family some financial security. Your coverage will replace your lost income and ensure your spouse and kids afford basic tasks. If your coverage is big enough, it will adequately cater for their needs until they can find another source of income.
2. To Pay off Debts and Cover Burial Expenses
Burial expenses can run into tens of thousands of dollars. If you don’t want your family to suffer emotionally and financially after your passing away, take a life insurance plan. It will pay for the expenses and lift the burden off their shoulders.
Life insurance plans also help in paying off debts left behind if you pass away. It’s good to note that debts don’t necessarily disappear when you die, and the burden of clearing them can transfer to your spouse or business partner. For example, if you co-signed for a mortgage with your spouse, they may be required to make the remaining repayments alone.
Creditors could also try to collect their money from your estate. This means that your beneficiaries will get far less than what you leave them.
Furthermore, if you’re in a business partnership, all parties in the business should take out life insurance plans. If one of you dies, they’re likely to leave the others with a grave financial burden. Life insurance ensures all your financial obligations are handled without troubling other people.
3. To Fund a Business or College
Whole life insurance provides you with permanent coverage and can only end if you cancel your policy. It’s an excellent way to build up cash value over time and tap into it if a necessity arises.
The cash value from a whole life insurance policy can offer a 3 to 4 percent return. After several years, this can be a sufficient amount of money to start a business or cover for an emergency. Successful businessmen like Walt Disney used such avenues to fund their startup businesses.
You can also borrow money from your life insurance to pay for college.
Life Insurance Is a Necessity!
Quit asking ‘should I get life insurance,’ and just go for it. There are many other reasons why you can buy a life insurance policy, including making payment of estate taxes.
Read on to find more informative and educative topics on finances.