Life insurance. Who needs it, right?

It might seem like another in a long list of expenses that add up as you move through life, but this one is a little more than that. You need to ask yourself a few questions. 

In the event of your untimely death, will you be leaving debts behind? Do you have a family to look after? Will there be economic troubles to deal with once you’re gone?

If you answered “yes” to any or all of these questions, then you should probably consider purchasing a life insurance plan ASAP.

Life insurance protects your loved ones from a potentially huge financial burden if you pass away. It may not seem important now, but if you get sick or have an accident, you don’t want that hanging over your head.

In this article, we’ll look at some concepts that might answer the question, “why is life insurance so important?”. And, we’ll look at what might happen to your loved ones and other affairs if you avoid getting it.

Don’t be in the dark any longer. Let’s talk about life insurance.

Why Is Life Insurance So Important? A Few Key Ideas

We get it. No one wants to think about life insurance, because no one wants to think about dying. It’s not ideal, but after the initial process, life insurance will bring you a sense of calm knowing that you’re loved ones are looked after.

Let’s look at why you need life insurance and a few of the concepts in a good life insurance plan.

Your Family Might Need It

Depending on your family’s financial situation when you die, your life insurance plan might be necessary for them to be looked after. If you suddenly died, they would lose your income, thus making it harder for them to survive.

Being a parent makes you responsible for the well-being of your children, alive or not. If you’re a single parent, this responsibility magnifies even more. The last thing you’d want to do is leave your child with financial hardships on top of the obvious emotional hardships attached to losing a parent.

As a spouse, leaving your other half without an insurance plan would mean that they’d have to pick up the financial slack, so to speak. Even if you’re a stay-at-home parent, when you’re gone, your spouse has to account for having your kids looked after, cooking, housekeeping, etc.

All of these things require financial stability, which your life insurance plan will provide. When you’re gone, you can still help your family through this hard time.

Your Business Can Still Prosper

If you’re an entrepreneur or part of a business venture, your passing doesn’t necessarily need to be the end of your involvement with the company.

Being a major figure within a company means that you have to think about what would happen if you died. Would stocks plummet with the public knowing one of the key parts of the operation is suddenly gone? Maybe.

If you leave money to your business, you can help it from going belly up when you aren’t there. The money could keep the business afloat for the months and years after your death while your fellow executives try and pick up the pieces.

Don’t Leave Debts Behind

Even a single person with no kids may consider a life insurance plan. It’s not a matter of something so dramatic as taking care of your family or making sure your business doesn’t fall apart, but life insurance can still help your loved ones.

Too often, people pass away and leave their debts with their families. It’s usually not intentional; debt has a way of building up and taking over lives, but it does create complications when the person dies.

Who is responsible for the debts after you’ve passed? Your loved ones are. Don’t add financial complexities to an already devastating and complicated situation. By getting a life insurance plan, you’ll be able to cover whatever debts you have.

Beyond your debts, it’s true that funerals are a huge expense. You could get an insurance plan to take that burden off of your family and friends when you pass.

What Type of Insurance Plan Should You Get?

So, now that you know why you should get an insurance plan, we need to cover what plan might work for your situation. There are two main options, so pay attention.

Term Life Insurance

Term life insurance is pretty simple. You’re getting insurance for a set period. It usually comes in 20-year terms and your annual premium is dependant on the amount your insurance policy is for. 

If you take out an insurance policy for $750,000 over a 20 year period, your annual premium might be about $500 per year. If you die within that 20 years, your beneficiary will receive the $750,000, tax-free.

Whole Life Insurance

While term life insurance is for a set period of time that you pay for, whole life insurance is for your whole life, until you pass away. So, what are the benefits of this kind of plan?

The biggest benefit is that the value accumulates as you age. This means that the policy will take some time to build cash value, typically around 15 years is when you’ll see some real worth.

Whole life is better for estate planning and living benefits, meaning you can dip into the fund later in life if you’re in good health.

Which Is Better?

Well, that depends on your own situation. Term life insurance has no cash value and is, as the name states, only valid for a term. You can increase the term at will, though.

Whole life accrues value over the length of the policy and allows you to withdraw funds in retirement if need be. If you get older and your kids are self-sufficient, this might be the way to go. Check out this plan to get the best insurance rates.

Lay the Security Net

So, why is life insurance so important? Because it shows that you care and that you’re thinking about your place in the world.

The best thing you can do for your family, friends, and business is to look after your affairs before you die so that they don’t have to. It may feel like you’re planning out your death, but laying a safety net will make you feel like a good spouse, parent, and business partner.

Once you’ve done it, you can rest easy knowing that you’ve done your part in settling your business.

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