Situations Where You Should Buy Life Insurance

Life insurance is a good investment as it protects those who may depend on you financially in the event you die. It covers one or more beneficiaries after you die and provides income replacement so that they can pay their expenses.  The main reason why most people don’t buy life insurance is because they simply can’t afford it. But’s it’s also true that consumers overestimate by approximately three times how much they believe life insurance costs.

When should you consider life insurance?

There are some situations in life where it’s wise purchasing a life insurance policy:

  • You are the only one earning income to support your family – Think about your loved ones and what would happen to them if you weren’t alive. Would you have enough to cover their ongoing expenses including rent, and mortgage?  
  • Co-signed for debt – If your debt is only under your name, nobody is responsible to pay it even after you die. The money in your estate is used to settle your debts and if you don’t have enough, creditors can’t come after your loved ones. However, if you co-signed for debt with someone else, such as a student loan, credit card, or mortgage, the individual named on a joint account with you is responsible for 100% debt repayment after you die.
  • Care for aging parentsIf you have parents that rely on you financially, you need to purchase a life policy to keep them financially stable if you won’t be around to care for them.
  • Your children’s college education – Every year the cost of education rises. Many students are graduating from college with substantial debt. If you want to have these funds available when your children go to school, life insurance can make it happen, even after you die.
  • Leave cash for heirs – You can leave cash for multiple heirs with life insurance, instead of assets like cars or houses.
  • When you have a large estate and you don’t want your heirs to pay estate taxes and administrative or legal fees – Life insurance can fund your estate liability and your heirs will receive the exact amount you want them to receive.
  • A child or family member with special needs – Permanent life insurance is great for this type of scenario. Besides your death benefit, you will also have the savings factor.
  • Your funeral costs – Funerals can be costly, approximately $10,000 for a traditional one. Think about what type of funeral you want and whether your family will be able to afford it. If you already purchased life insurance, make sure you review your coverage every few years taking into account any new major expenses, change in family status, or income. You may need more or less coverage based on these circumstances.

Life insurance isn’t exactly a luxury, but rather a necessity. There are instances where it may be wise to purchase a life policy. Speak to a licensed agent today.

Sources
  • https://www.investopedia.com/articles/pf/06/insureneeds.asp

  • https://smartasset.com/life-insurance/top-ten-reasons-to-buy-life-insurance

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