For many people their first introduction to life insurance is when a friend or a “friend of a friend” obtains an insurance certificate. In some cases the close friend or relative died without having adequate protection or life insurance burial insurance companies. My experience was introduced to a life insurance business that required me to set appointments with friends and family as I learned about the ins and outs of the industry and, hopefully, made some sales.
However it’s how the majority of people acquire life insurance – they don’t buy it, they sell it to them. However, is it really something you need or is it simply an inconvenience that is pushed under your nose by a salesperson? While it could appear as if it’s the former, there are actually many reasons why you should purchase life insurance.
As we grow older and get married, begin with a family or start the business of our dreams, it is important to realize it is necessary. As an example, imagine an insurance plan that provides security. It is possible that you are the best tightrope walker on earth absolutely. You could walk without a net, butthe question is “Why?” You love your life and the lives of those closest to you. You wouldn’t act in a way that suggested you felt differently. In reality, we have no control over the unpredictable nature of life, or of unforeseen occurrences. With that in mind the same way that a safety net helps to protect against the uncertain is full of, so too does life insurance. It is a vital and fundamental foundation to a solid financial plan. Over the years, life insurance has given numerous responsible and compassionate people peace of mind that the money will be there to safeguard those who are important to them, their the family, and their estate in many ways, including:
1. To pay the final expenses
Funeral costs and burial can easily climb into the hundreds of thousands of dollars, and I don’t want my wife, parents, or children to be burdened financially in plus emotionally upon my death.
2. To pay for expenses of children
As most responsible and caring parents, it is necessary to be sure that your children are taken care of and able to pay for a top college education. For this reason, extra coverage is essential for children who are staying at home.
3. to replace the spouse’s income
If one parent dies while the children are young the remaining parent will need to supplement that income, which is essential to their life. A responsible surviving parent would have to employ help with household chores like cleaning up the house, washing clothes and cooking. Add to that equation if you’re a single parent, helping with schoolwork and taking your kids to doctor’s visits.
4. To Pay Off Debts
Alongside providing an income to meet daily costs, a family may require insurance to pay off debts like the mortgage, so that they don’t have to sell the house to keep their finances afloat.
5. To purchase a Business Partner’s Shares
In a partnership business, the partners need insurance on each other partner’s life. The reason is so when one member dies, others will have enough money to buy his interest from his heirs and also pay his portion of the obligations of the company without needing to sell the business itself. They also have the same need (due to the risk that one of them may die), and they simultaneously purchased insurance on each other’s life insurance.
6. To Pay Off Estate Taxes
Estate taxes can be very high Therefore, having insurance that can pay these is essential to avoid jeopardizing assets or the funds set aside to fund retirement. Use of insurance for this reason is common in large estates, and is a permanent (rather than term) insurance in order to guarantee that the protection is available for the duration of the entire life.
7. To Provide Living Benefits
As medicine advances and the rising cost of healthcare, individuals are living longer however, they are unable to afford it. Living benefits are a way for utilizing the death proceeds of the insured dies to help with the burden of obligations or to alleviate pressure on their own and other people.
How Much Coverage Should I Get?
The face value, also known as the “death benefit” of an insurance policy (i.e., the amount of money that are paid towards the person who is insured) is supposed to be enough to pay for the after-tax earnings you would have earned had you lived a full life, presuming you can afford the annual premiums of the amount. In other words, the insurance compensates you for the money you were not able to earn working until retirement due to an untimely death.
A good amount of insurance allows your family to continue living their lifestyle, even though your earnings are no longer available. The actual amount that you need to purchase is contingent upon your present and probable future income, the conditions that could affect yourself or family members members, and your current budget for the cost of premiums.
Full Life, or term?
A few people prefer to drive Cadillac, Lincoln or Rolls Royce, which are equipped with all the modern technology that makes driving safe and as effortless as possible. Others opt for less customized versions which are as reliable as their higher-priced counterparts however, they require more attention to detail.
Whole life is known as the “Cadillac” of insurance; the companies aim to do things for their customers, specifically investing a percentage of your premiums so that the annual cost does not get higher as you age. The investment component of insurance implies that the premiums tend to be higher than those of the same term insurance policy that has the same amount of face value. The reason is that whole life insurance is designed to cover your entire life.
It is a type of term insurance that, on the contrary, is a temporary life insurance. There aren’t additional cost to invest in, and there are no guarantees or promises beyond the the term. The term can vary from one to 30 years. The annual price for term insurance is always less than that for whole life insurance, and is without the investment component, however your premiums will rise (often considerably) once the term period expires.
Life insurance of both types, term or whole life (or one of their derivatives) offer advantages and drawbacks Both have their own place according to the desires, needs, and financial objectives of the buyer. A professional insurance agent can assist you in deciding which type of policy is the best one for you based on your personal circumstances. But whichever you select, be sure that you have enough insurance to help you achieve your goals in the short term and in the long run.
The Final Word
A lot of people are mistakenly convinced that life insurance is a scam. It’s because the money that is paid to cover premiums is lost if death doesn’t occur during the coverage period (in terms of death insurance) or since a lot of individuals live to an old age and continue to pay the premiums for their life insurance. Many people who criticize life insurance compare the protection with gambling and then opt to not protect themselves at all.
Others have the belief that life insurance will not help them. For those who believe that it is the truth you are 100% correct! The truth is , life insurance provides a way for caring and responsible people to help ensure that their family members can continue to thrive when the time comes for your unexpected death, which is a difficult time of loss. Of course, there’s no guarantee that you will die, but nobody can predict when. It could be tomorrow, today in the future, tomorrow, or even 50 years from now however, it will happen eventually.