September Goal: Protect Your Loved Ones
Life insurance is a simple answer to a very difficult question: “How will my family manage financially when I die?” No one wants to think about a life without them! If you have someone who depends on you financially, the question is unavoidable.
Life insurance is a key component to leaving your loved ones in a secure financial position after your death. It also can pay for final expenses such as debt repayment and funeral expenses. Too often, life insurance is an overlooked aspect of financial planning.
The Life Insurance and Market Research Association conducting a study that revealed less than half of U.S. households say they have individual life insurance coverage, and 40% of Americans say they need more coverage. How much coverage do you need? The ideal amount depends on your circumstances. Kathy Nithman at Nithman Financial Group can help you assess your needs and recommend an appropriate amount.
Top 10 Reasons to Buy Life Insurance 1
Life insurance is one of those things that just about everyone needs but far too few people actually have. It’s easy to put off purchasing a policy when you’re young and relatively healthy. But the longer you wait, the greater the chances of something happening before you get yourself coverage. Maybe buying life insurance been on your to-do list for a while but you haven’t gotten around to it yet. Check out these 10 reasons why you can’t afford to wait any longer.
1. Replace Lost Income
Life insurance works to provide financial security to your loved ones after you pass away. You have to consider what would happen if you were to die suddenly. This is especially true if your loved ones rely solely on your income. Get yourself adequate coverage. That way, those you care about won’t have to worry when the monthly bills come due.
2. Cover Burial Expenses
Sadly, even a basic funeral service can run upwards of several thousand dollars. While it’s possible to pre-pay for your funeral, people don’t often think that far ahead. Pre-payment can ensure everything is in place for your loved ones after you die. However, there are risks to pre-payment. Life insurance can give you and your beneficiaries more of a guarantee, lifting a burden off of them as well as yourself.
3. Pay Off Debt
Just because you die doesn’t necessarily mean your debts will disappear. If you and your spouse have co-signed for a mortgage or other loans, your spouse may become entirely responsible for repayment. Creditors could also try to collect from your estate. While that settles your debts, the amount your heirs receive will be reduced. Life insurance allows the money those you leave behind need to take care of any lingering financial responsibilities you may have had.
4. College Planning
There are a number of ways to save money for your child’s education. You may not have thought that a life insurance policy would be a viable option, but insurance payouts can actually provide a good supplement to your savings. If your child ends up borrowing money to get through school, the insurance proceeds could also help wipe out student loans.
5. Build Cash Value
Term life insurance, a type of life insurance, stays in place for a set period of time. Another option, whole life insurance, provides permanent coverage that only ends if you cancel the policy. Whole life insurance allows you to build up cash value over time, an attractive prospect to many people. That cash value acts as an extra cushion that you can tap at any time. This may come in handy if you have a financial emergency down the road.
6. Diversify Investments
Some people also use life insurance as an investment tool with universal life policies. These policies are tied to a specific investment product. Then policyholders receive dividend payments based on the product’s performance. Before you dive into this type of insurance, you’ll want to read the fine print so you’ll know the potential risks and returns before you commit.
7. Business Planning
If you own a business, it’s vital that you have life insurance. This covers your obligations so your hard work doesn’t go to waste. Are you involved in a partnership with someone else? You should both have coverage. That way, when one of you dies, the other isn’t left shouldering the financial burden.
8. Estate Taxes
When someone passes away, their heirs often face estate and inheritance taxes on any assets they receive. If you’re worried about your loved ones getting hit with a big tax bill, a life insurance policy can help cover these added costs.
9. Coverage is Affordable
One of the excuses people tend to make for not buying life insurance is the cost. But truthfully, coverage often ends up pretty affordable for most people. Term life tends to be less expensive than whole or universal life. Plus, the younger and healthier you are, the lower your premiums will be. Unless you smoke or have a preexisting health condition, you could qualify for some very affordable policies.
10. Peace of Mind
No one can truly predict the future. But having life insurance means you and your loved ones can prepare for any eventuality. Even with a small policy, you may find yourself sleeping a little easier at night knowing that your loved ones have protection in place should something happen to you.
Examine your life insurance policy. Do you have enough to pay for end of life expenses, debt repayment, and other expenses? If someone depends on your income, do you have enough to replace your income so that your heirs can continue their current lifestyle?
Nithman Financial Group offers a complimentary police review service. If you would like to learn how life insurance can play a vital role in your financial plan for your family’s future, call us at today to take the first steps toward taking care of your loved ones.
1 Rebecca Lake, smartasset.com, August 2018.