6 Reasons for Purchasing Life Insurance

Reaching adulthood means a shift in priorities. We have a greater sense of responsibility. Family and friends depend on us more than ever before. An unexpected death often means our loved ones are affected financially. Despite this knowledge, however, many of us neglect to purchase life insurance – the very protection that could ensure financial stability to those left behind. In fact, recent studies reveal that 41% of U.S. consumers carry no life insurance coverage at all. Nearly 1/3 of Americans that do carry coverage only have the basic group policy offered by their employer.

Do you have enough life insurance to protect your family? If you’re one of the 41% that doesn’t, here are 6 reasons why you should start shopping rates now.

1) To Protect Your Family

It seems appropriate to start with the most obvious reason – life insurance can replace your income should you die before your dependents. Whether you’re the breadwinner or a homemaker, what you provide for your family adds value to the family unit.

As difficult as it will be, life must go on after your passing. And you want it to – you want your children to go to college and your family to enjoy the lifestyle they are accustomed to. Your investment in a life insurance policy ensures your family has what they need to pay the bills and/or hire someone to take care of household duties. At the very least, it offers your family an opportunity to grieve without the added stress money brings to the table.

2) To Honor Any Outstanding Debts

For many, protecting family members left behind is the primary reason for purchasing life insurance. While your dependents are struggling to deal with their loss, the last thing they need is lenders breathing down their neck. Some debts, such as federal student loans, are dischargeable when you die. Many, however, are not. In fact, some private loan contracts include an acceleration clause that requires the balance be paid in full once the borrower has passed.

3) To Protect Your Business and Partners

Business owners have a responsibility to more than just their family. They have employees and business partners to consider and, for many, their death could have a significant impact on those left behind. If you’re unfamiliar with key man life insurance, visit our blog for more details regarding this critical business tool.

4) Can Be Used in Estate Planning

When a family member dies, those left behind are often left with a great deal of expenses. Funeral costs and federal and state estate/inheritance taxes can leave some heirs scrambling to sell off assets.

For individuals whose goal is liquidity, a life insurance policy, such as an irrevocable life insurance trust, can prove beneficial. The policy cannot be modified, revoked, or terminated for as long as you’re alive. Upon your death, proceeds are protected against creditors and estate taxation.

5) Your Employer Coverage is Lacking

More than 50% of employers today offer life insurance as part of their employee benefit package. While this is a wonderful benefit that we recommend taking, we do not recommend relying on this as your exclusive death benefit. Most group life insurance policies offer minimal protection, covering one to two times the employee’s annual salary, at most. Most agents and financial advisors recommend a MINIMUM of seven to ten times your annual salary. And, that’s just a starting point. For more information regarding employer life insurance coverage, visit our blog The Downside to Purchasing Life Insurance Through Your Employer.

6) The Longer You Wait, the More Expensive It Will Be

The older you get, the more health issues tend to pop up. The earlier in life you purchase a term life insurance policy, the cheaper the premium you will pay. A 20-year, $500,000 term life policy would only cost about $16 at age 35. It will double in price at around age 45 and will be close to $65 by age 55, assuming you don’t have any health complications along the way.

If this is something you’re considering, be sure to seek the guidance of an experienced life insurance agent or financial advisor.

Few of us want to face our own mortality. It can feel somber and depressing. Just the same, it is a fact of life and few of us know when it’s coming. The best we can do is prepare for the aftermath. Fortunately, life insurance isn’t nearly as expensive or difficult to acquire as many people assume, especially with the assistance of an experienced agent. Make a plan today for the future that is tomorrow.