Reasons why you should Buy Life Insurance

Reasons why you should Buy Life Insurance
Reasons why you should Buy Life Insurance. Image source: Supplied

When you’re young, life insurance may be the very last thing you want to think about. Even so, it’s something everyone needs. Putting off the purchase of life insurance until you need it is the wrong way to go. Why? Because as you become older, there’s a higher probability of developing a serious medical condition, etc.

If you’ve been putting off buying a life insurance policy with, then review these reasons why it’s important to obtain life insurance now.

1). Funeral Cover

Funerals quickly run into the thousands of dollars, even for the most basic funeral service. With a funeral cover, you’ll be able to pay for your funeral ahead of time (kind of). Pre-payment of funeral expenses can make things much easier on your loved ones after you pass.

2). Cover College Tuition

Life insurance coverage can also be used to help make sure your kids’ college tuition is covered. Life insurance payouts can be in addition to any funds you’re planning to save. In addition, if your child has already borrowed money for school, the insurance payout could also be used to pay off their student debt.

3). Provide Income

Life insurance payouts can also ensure your family’s financial stability by providing income after you pass away. If you’re the main earner in your family, and you suddenly died, then a life insurance policy can help to replace the income lost with your death. This way, you’ll know your loved ones are financially able to survive and that they’ll have an income to count on.

4). Pay Off Debts

Many families have a mortgage, car loans, and other debts. How will your family manage if you die? A life insurance policy can help pay off any outstanding debts. Your loved ones won’t face the creditors or lose their possessions. Buying a life insurance policy will give you peace of mind that your family will be able to continue living in the home you’ve provided, while also paying off any other outstanding debts.

5). Business Planning

Do you own a business? Do you have a partner? If you’ve answered yes, then it’s imperative you buy life insurance. What will happen if you die? Will your partner be able to carry on with the business? Will they have the financial ability to keep your business going?

Life insurance is actually an option you and your business partner should both have. See this as an investment in the business. If one of you dies, the other will be able to keep the business going. This will also make sure your employees’ livelihoods are guaranteed if one of you passes.

If you’re self-employed, having a life insurance policy is still necessary. The reasons are similar as for a business owner, in that your employees, stakeholders, etc. will be protected if you should die. They will still be paid by the policy. In addition, a life insurance policy can also be used as collateral for obtaining a small business loan.

6). Diversify Investments

If you’re already making investments, then this is another way to earn. Life insurance coverage is a great way to diversify your investments. For example, if you buy a universal life policy, these are generally tied to a specific investment product. You’ll earn dividends based on the product’s performance.

While this is a great way to invest, be sure to read the terms and conditions before signing a contract. Any type of investment runs risks and returns may not be guaranteed. Know what to expect from the policy before buying it.

7). Build Cash Value

You can buy a type of life insurance called whole life. These types of policies help you to build up cash value over time. The cash value gives you a financial cushion that can be used any time before you die. For instance, if you have some type of emergency and don’t have the cash on hand, you can tap into your whole life insurance policy for financial assistance.

8). Pay Estate Taxes

When you die, your loved ones will be faced with estate and inheritance taxes. These can eat away any financial cushion you’ve left behind. However, life insurance coverage can be used to help pay these tax bills and any other added expenses.

Life insurance can be a valuable financial gift to leave behind for your loved ones. While this is true, some people fear that investing in life insurance is too expensive. The cost of premiums varies, but with a little research you’ll be able to find the best policy for your life situation at a cost you can afford.

Now is the best time to buy a life insurance policy. You’ll have peace of mind that your loved ones will be cared for when you’re no longer with them.