No one plans to die unexpectedly which is precisely why everyone should have a life insurance policy. Unlike auto insurance, life insurance isn’t mandatory. The right policy, however, can significantly take the strain off your sudden death. The financial contributions that you once made to support your family are replaced by the money set aside by the life insurance that you chose to buy.
Reasons to Purchase a Life Insurance Policy
Here are six reasons why you should have a life insurance policy:
- To cover funeral and burial or cremation costs. Final expenses are costly. Rather than leave a family member stuck footing the bill, your life insurance policy pays the debt. It can help with funeral, burial, and cremation costs.
- To pay for a child’s college expenses. Taking care of your children’s educational expenses provides them with a better future. You take solace knowing that they won’t go into debt paying for college because you thought ahead and bought an insurance policy.
- To replace the income that is lost when a person dies. You may be the sole breadwinner or the main breadwinner. Either way, your financial contributions were a necessary part of your household’s income. Your family can use the money paid by the insurance company to make up for the loss of wages due to your death.
- To pay off debts. Any outstanding balances can be wiped away, making it easier for your family to survive without going further into debt. Creditors can be paid off in full which lessens the amount of money needed monthly to survive.
- To buy out a business partner. Buying out a partner’s shares of a business is another option. It allows your family to sell your business without legal proceedings halting the process. The partner gets what he or she put into the business, and you don’t have to worry about them filing a lawsuit later on.
- To pay off taxes on the estate. Depending on how much the estate is worth, your family may have a significant amount of taxes to pay off. Your life insurance policy should be enough to take care of the expense with money left over.
A life insurance policy provides your family with a means to survive after you are deceased. It protects the assets that you worked so hard to acquire because your loved ones aren’t forced to sell them to pay off debts. If you have children, your life insurance policy provides them with financial security.
How Much Should Life Insurance a Person Buy?
Determining how much life insurance is enough for your family is a personal decision. There are many factors to consider including your current income, amount of debt, number of children, the number of businesses you own, and even where you live. Deciding to buy a policy that offers a certain level of financial security is what it takes to set your family up for after you’re gone.