Here are 8 Reasons Why Life Insurance is a MUST!
Updated: Dec 23, 2020
Disclaimer: This blog may contain affiliate links below and I may receive commissions for purchases made through links in this post, but these are services that I highly recommend. I will not put anything on my blogs that I have not verified or personally used. This post is based on my personal opinion, experience, and my personal research and is for educational purposes only. If you are seeking further guidance please see a professional expert. To view my full disclaimer, Click Here.
So, life insurance is for old people, right? Yea, I kind of thought the same thing too until I did some research on life insurance. Life insurance is a contract between the policyholder and the insurer. The insured agrees to pay a premium to the insurer/carrier in exchange for a sum of money sent to their beneficiary when the insured dies. Life insurance can be helpful in case of the death of a spouse, child, or family member. Here are 8 reasons why life insurance is a must.
Here are some terms to understand before we get started:
Policy holder: The person that owns the policy. This can be the same person as the insured. In some cases this can be a parent/guardian if the insured is a child.
Insurer/carrier: This is the insurance company that approves you for a life insurance policy.
Insured: The person that the insurance company is covering with life insurance.
Policy: The life insurance terms and conditions/contract between the policyholder/insured and the insurer/carrier
Riders: Additional elements of coverage that can be added to a policy to increase the value of coverage the policyholder/insured applies for.
Death benefit: The amount that is paid to the designated beneficiary upon the death of the insured. This is usually the coverage amount the insured was approved for.
Beneficiary: The person designated by the insured to receive the death benefit in the event of the insured’s death.
Premium: The monthly, quarterly, or annual payment the insured/policyholder submits to the insurance carrier to pay for the policy. Premiums can be based on a term policy (10-30 years) or a whole life policy (until the insured dies or until age 100).
Living Benefits. What are living benefits you ask? Living benefits are additional coverage features (or riders) that can be added to a life insurance policy when you apply to get life insurance with a particular carrier. Living benefits can include riders for terminal illness, critical illness, or chronic illness. These types of riders allow you to access certain percentages of your death benefit while you are living if you were to be diagnosed with a terminal, chronic, or critical illness. This basically means, you don’t have to die in order to access some of the funds from your life insurance policy. Certain conditions apply depending on the carrier, so be sure to discuss this option with your licensed life insurance agent.
Some pre-existing conditions are covered. Life insurance used to reject applications from individuals with certain health conditions; however, carriers have become a little more lenient with some of them; such as, Diabetes and High Blood Pressure. This basically means, if you have a condition that is well managed and meets the terms of the insurance carrier, your insurance agent should be able to find coverage that works best for you.
Peace of mind for you and your family. There are many things in life that cause us and our families to struggle financially. Death or illness should not be one of them. Having a life insurance policy gives us peace of mind that our families will not be left holding the sack of debt we have left behind in the event of our passing, or have to worry about if they can afford to keep the house.
Pay off debts. This continues the peace of mind thought. Think about it this way. Imagine a father who is the sole “breadwinner” for his family. He and his wife have 5 children and the wife is a stay at home mother. If the father were to pass away suddenly, in a car accident for example, that family’s main source of income is now gone. A life insurance policy can, if nothing else, allow the family to bury their loved one, pay off the mortgage, and maybe even the car loan too. Paying off those major bills can help the family tremendously and allow them to grieve without having to worry about bill collectors knocking on their door.
Cover funeral expenses. Let’s be honest, funerals are not cheap! In your moment of grieving you also have to worry about the funeral location, the speakers, floral arrangements, the casket, transportation for the casket, transportation for the immediate family, informing family and friends, the burial site, the gravestone and engravement, etc. It’s a lot to figure out in a short amount of time and although funeral homes offer assistance, that assistance costs money. Life insurance policies provide, again, that peace of mind for our family members. Having a Life insurance policy allows our family to worry about honoring our memory and properly grieving their loss instead of racking their brain about the funeral expenses they have to pay out of pocket.
Set up a future for your children. Many of us don’t realize that life insurance policies can be a great resource when planning for our children’s future. There are ways to set up a life insurance policy for your child when they are young that would enable them to access sums of cash when they become an adult. This can help them tremendously to set them on the right path in adulthood. They can use the money for college expenses, investing in a business, or even as a down payment for a new home. Be sure to contact your life insurance agent to discuss your options on how to set up a policy for your child that will benefit them when they become an adult.
Save your business. Life insurance policies also come in handy when a key employee of a business passes away. For example, if a business is run by two business partners and one of them dies, the death benefit of the life insurance policy can be used to help keep the business afloat until the surviving business partner can find a way to sustain the business again. There are some requirements to accomplish this so speak to your life insurance agent to find out more details.
Add to your retirement. There are some types of life insurance policies that can function as a supplement to your retirement fund. These are a little more involved than just general life insurance so be sure to contact your life insurance agent to get all the details of how these types of policies can beef up your retirement fund.
Here are two bonus reasons why having a life insurance policy is important!
Member Benefits. Some life insurance companies offer member benefits such as, financial advising, legal assistance, charitable death benefit donations, and more. Not every carrier will have member benefits, but it is worth having at least one policy that provides this advantage. You never know, you may need some of the services they offer one day.
CASH VALUE!!!!!! Who doesn’t love getting money every now and then. Well, some types of life insurance policies (i.e. whole life and universal life) have the ability to accumulate cash value over the life of the policy. Depending on your premium amount that you pay, cash value can build pretty quickly which you can access through a loan from the policy. I have heard many stories of friends and family taking loans out on their life insurance policy to cover home renovation expenses or other large expenses they had after paying their policy premiums for a certain period of time.
Thank you for reading my post “Here are 8 Reasons Why Life Insurance is a MUST!” I hope that these reasons have informed you of how valuable having life insurance can be. Feel free to subscribe and share this post. Also feel free to follow me on social media!