Life insurance is one of those things that just about everyone needs but far too few people actually have.
Being a responsible adult means making sure loved ones who depend on you are financially safeguarded if you unexpectedly leave them behind.
The way you provide that protection is with life insurance.
Insurance is tricky. It's not like buying a chair or a shirt or groceries. When you buy insurance, you're buying a promise. It's a promise that if something catastrophic happens to your business, your carrier is going to assist you to make your business whole again. Sometimes,
though, it's tempting to question the value of insurance because it is an intangible product.
The importance of investing in life insurance cannot be stressed enough. Life insurance is designed to offer financial safeguards against death of the policyholder and also works as a good investment plan, which helps you meet several life goals in turn.
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1. The younger you buy, the cheaper your insurance plan:
Life insurance plans will be considerably cheaper when you invest in the same at a young age.
The younger you are, the cheaper your insurance plan will be. Plan out the insurance coverage that you require even if you are currently single and do not have direct dependents. Single individuals often have to provide financial assistance to siblings or parents. Insurability is another factor worth considering. The younger and healthier you are, the more insurable you will be. You can thus get the best possible insurance policy rates.
2. Income replacement
You and your significant other may have planned for a future based on two incomes. But what if one of you passes away unexpectedly?
Term life insurance can be used to replace the lost income so the survivor can maintain the same standard of living.
3. College funding
Alright, this one only applies if you have kids. But have you seen tuition rates lately?
Term or permanent life insurance can help fund a college education. If you pass away, the death benefit may be invested and potentially grow to the needed amount by the time your children reach college age. Feel better knowing that you helped prepare for their future.
4. Peace of Mind
What happens to your loved ones when you are no longer there? Death is an inevitable reality of life and we all worry about taking care of our families. Your family will depend on you throughout your lifetime and also when you are not there anymore. Invest in a good life insurance plan and put these worries to rest. Your insurance investment will take care of your family in any situation and will help in replacing lost household income, paying for the education of your kids or even providing financial security to your spouse if something happens to you.
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5. Run a small business or family farm by managing the risks of ownership.
Take vacations without worrying about flight cancellations or other potential issues.
6. Own a home, because mortgage lenders need to know your home is protected.
7. Insurance Protects the Small Guys:
When you look at your industry, you see the "big guys" and the "small guys." If a risk goes wrong, the big guys will be able to survive. They can take a hit. But the little guys can't take a hit. As a result, they are more risk averse, and in some cases, they sell out to the big guys. If enough little guys leave the industry (and one big guy swallows them up), you're left with a monopoly. With insurance, however, the little guys have support if they want to take a risk, which means they stick around longer. What it comes down to is that insurance helps prevent monopolies from forming.
8. Pay Off Debt:
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Just because you die doesn’t necessarily mean your debts will disappear. In the instance that you and your spouse have co-signed for a mortgage or other loans, your spouse may become entirely responsible for repayment. The other outcome could result in creditors trying to collect from your estate. While that gets rid of your debts, your heirs will receive the depleted remainder. Life insurance allows those you leave behind to take care of any lingering financial responsibilities.
9. Life insurance policies run on uncertainties. You may be healthy now and paying a premium for life insurance may seem to be an added financial burden, but if you suddenly fall ill, you may not be allowed to but a life insurance policy. Therefore, it is imperative to buy one early on in your life because it remains in force if your health deteriorates later on. Insurance companies allow you to attach certain riders or benefits to your existing or new policy.
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10. To Buy a Business Partner’s Shares,
Since I’m involved in a business partnership, I need insurance on my partner’s life. The reason is so if he dies, I will have enough cash to buy his interest from his heirs and pay his share of the company’s obligations without having to sell the company itself. He has the same needs (due to the risk that I might die), and he simultaneously purchased insurance on my life.
11. To Pay Final Expenses,
The cost of a funeral and burial can easily run into the tens of thousands of dollars, and I don’t want my wife, parents, or children to suffer financially in addition to emotionally at my death.
12. Since it is an instrument that keeps you invested for the long term, it would help you achieve your long-term goals such as buying a home or planning your retirement. It also provides you with diverse investment options that come along with different types of policies.
Some policies are tied to certain investment products that pay dividends based on their performance. If you are opting for an investment-linked policy, be sure to read the fine print to be fully aware of the potential risks and returns.
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