Why Buy Life Insurance?
Although many people understand the need for health, home and auto insurance a lot of us tend to overlook life insurance as an important investment. But, there are many reasons why buying life insurance is just as important as those other types of insurance.
The first benefit is that life insurance helps pay funereal expenses. This includes any expenses associate with a burial as well as probate and estate administration costs, debts or medical expenses that weren’t covered by health insurance. Mourning the loss of a loved one is difficult enough without added financial stress.
Life insurance can also provide a replacement for lost income of the deceased to help the surviving family members maintain their previous standard of living. This helps quite a bit especially if the family includes young children or dependant adults. Additionally life insurance can create an inheritance for your heirs even if you have nothing else to pass on to them. This also includes donations or gifts to charities.
Another benefit of life insurance is that it can help pay federal and state “death” taxes. These estate taxes are the responsibility of your heirs so this helps them avoid taking a smaller inheritance or liquidating assets to pay for these costs. It can also help your family pay off debt, either yours or theirs, including student loans, credit cards and mortgages.
Finally, buying life insurance can create another source of savings for you and your family. If you have a cash value policy you can borrow against it or withdraw the money if needed. Cash value policies are a type of forced savings plans and the interest on them is tax deferred as well as tax exempt if the money is eventually paid as a death claim.
There are many reasons why having a life insurance policy makes sense. However, it all boils down to one fact – protecting your loved ones in the case of an unfortunate loss. And that’s the best reason of all.