You may be saying, “Life insurance is a pretty straight forward item.” You purchase a policy in order to protect someone or something, right? In general you’re right.
However, life insurance and why you purchase it have changed over the years. Some are simple and obvious. Some are complex and surprising.
Here are 10 Reasons to Buy Life Insurance.
1. Paying for Final Expenses. You may be surprised, but dying is expensive! Whether you opt for cremation ($2,000-$3,000) or a traditional burial (Approximately $10,000), things add up quickly.
2. Replacing Income. You need to calculate your current earnings. It’s a little more complex than simply saying I need a 20 year term; 1,200,000 policy if I make $60,000 and have 20 years left until retirement. You also need to estimate your future earnings, bonuses, potential income with raises and promotions.
3. Outstanding Debt Payment. You may have a mortgage, credit card debt, car payments, and outstanding loans.
4. Paying for Education. Your children may want to attend college. A quality education may be difficult to attain when a parent passes away without a financial backup plan.
5. A Child with Special Needs. Wouldn’t you like the reassurance that your special needs child will be cared for if you passed away? Your life insurance can guarantee that there will be money available to care for your child.
6. Funding Emergencies. Unforeseen expenses can often occur. This is especially true if you get a terminal illness or injury. You may have had to miss time from your job which caused you to lose income. You may accumulate significant medical bills and other medical related expenses such as counseling.
7. Business Insurance. You may need to purchase business related life insurance. Some examples of these are Executive Bonus, Key Person Life Insurance, Split Dollar and Deferred Compensation that is funded with life insurance.
8. Your Second Marriage. If you have remarried and you have children, life insurance can put out a potentially stressful scenario. If you purchase life insurance on yourself, your new spouse will be provide financial security. Your life insurance will also allow your children to receive your estate immediately. You will be avoiding any future family tension between your spouse and kids.
9. Charities. You may have a different goal with life insurance. You may have a favorite charity, organization, or church.
10. Estate Taxes. You can use your life insurance to provide liquidity with the current tax laws. This can be used to pay for your estate tax liability.
These 10 reasons for life insurance can give you a quick glimpse into how it is used. Remember that life insurance is not only used for family, but is often used for business purposes too.
Please give me a call if you have any questions about your life insurance needs.
I look forward to speaking with you.