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Reasons to Buy Life Insurance

For many people, the first introduction to life insurance is when a friend or “friend of a friend” gets an insurance license. For others, a close friend or relative died without having adequate coverage or life insurance. For me, I was introduced to a life insurance company where I had to schedule meetings with friends and family while I learned the ends and ends of the industry and hopefully -the, make sales.

Unfortunately, however, this is how most people acquire life insurance – they don’t buy it, they sell it. But is life insurance something you really need, or is it just an inconvenience put under your nose by a salesperson? Although this may seem true, there are actually many reasons why you should buy life insurance.

As we age, get married, start a family, or start a business, we need to understand that life insurance is absolutely necessary. For example, imagine a safety net. You are perhaps the greatest tightrope walker in the world, without a doubt. You could play without a net, but “Why?” You cherish your life and the life of your loved ones and you wouldn’t do anything to show that you felt differently. Let’s face it, we have no control over the unpredictability of life or unforeseen events. With that in mind, just as a safety net protects life from uncertainty, so does life insurance. This is an indispensable and fundamental foundation of a sound financial plan. Over the years, life insurance has given many caring and responsible people the peace of mind that money will be available to protect the most important people in their lives, families and estates from many ways, including:

1. To pay final expenses

The cost of funerals and burials can easily run into the tens of thousands of dollars, and I don’t want my wife, parents, or children to suffer financially and emotionally when I die.

2. To cover children’s expenses

Like most caring and responsible parents, it is necessary to ensure that our children are well taken care of and can afford a quality college education. For this reason, extra coverage is absolutely essential while the children are still at home.

3. To replace spouse’s income

If one of the parents dies when the children are young, the surviving caregiver will have to replace this income, which is essential to their way of life. The responsible surviving parent would need to hire help with household chores like house cleaning, laundry and cooking. Add to that equation if it’s a single parent, helping with school homework, and taking your kids to the doctor.

4. Pay off debts

In addition to providing income to cover day-to-day expenses, a family would need insurance to cover debts like the mortgage, so they wouldn’t have to sell the house to stay afloat.

5. To buy the shares of a trading partner

In a business partnership, the partners need insurance on the life of the other partner. The reason for this is that if one dies, the others will have enough money to buy his stake from his heirs and pay his share of the company’s obligations without having to sell the company itself. They have the same needs (due to the risk of death of one of the partners) and they have simultaneously taken out insurance on the life of the other.

6. To pay property taxes

Inheritance taxes can be high, so having insurance in place to pay them is essential to avoid jeopardizing any assets or funds set aside for retirement. The use of insurance for this purpose is more common in large estates and uses permanent (rather than term) insurance to ensure coverage remains until the end of life.

7. Provide Living Benefits

With advances in medicine and rising health care costs, people are living longer, but cannot afford it. Living benefits are an option to use death proceeds before the death of the insured to help meet obligations or necessities to ease the strain on themselves and others.

How much coverage should I buy?

The face amount or “death benefit” of an insurance policy (i.e. the amount of proceeds paid to the beneficiary) should be large enough to replace the after-tax income you would have earned had you lived a full life, assuming you could pay the annual premiums for that amount. In other words, the insurance replaces the income you weren’t lucky enough to earn by living and working until retirement due to premature death.

The right amount of insurance allows your family to continue to live, even if your income is no longer available. The actual amount you need to buy depends on your current and likely future income, any special circumstances affecting you or your family, and your existing premium budget.

Whole life or temporary?

Some people prefer to drive a Cadillac, Lincoln or Rolls Royce, which are equipped with all the electronic gadgets that make driving safe and as easy as possible. Others prefer less personalized brands that are just as reliable as their more expensive cousins, but require more hands-on attention.

Whole life is the “Cadillac” of insurance; these companies try to do everything for you, including investing part of your premiums so that the annual cost does not increase with age. The investment characteristic of the insurance means that premiums are generally higher than a similar term policy with the same face value. After all, whole life insurance is meant to cover your whole life.

Term insurance, on the other hand, is term life insurance. There are no excess premiums to invest, nor any promises or guarantees beyond the term, which can range from 1 to 30 years. The annual premium for term insurance is still lower than for whole life insurance, without the investment component, but your premiums will increase (often significantly) after the policy period expires.

Both types of life insurance, term or whole life (or one of their derivatives) have advantages and disadvantages; both have their place according to the needs, desires and financial objectives of the purchaser. A knowledgeable professional insurance agent can help you decide which type of policy is best for you based on your situation. But whichever you choose, make sure you have enough coverage to meet your short-term and long-term goals.

The last word

Some people mistakenly believe that life insurance is a scam. This is because premium money is lost if death does not occur within the period of coverage (in the case of term insurance) or because many people live to old age and continue to pay their premiums. permanent insurance. These naysayers liken life insurance protection to gambling and forego protection entirely.

There are others who believe that life insurance does not help them. For these people, the answer is: you are absolutely right! The truth is, life insurance is a way for caring, responsible people to make sure their family can keep moving forward in the event of an untimely death, a truly difficult time of loss. Of course, there’s no betting – you’ll die, but no one knows when. It could be today, tomorrow or 50 years from now, but it will eventually happen.

Do you have life insurance? Why or why not?

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