Why do I need life insurance?
Although you may not think about it, your ability to earn income is a significant asset and life insurance helps replace lost income in the event of your premature death. Here are some reasons people buy life insurance. The death benefit may be used: • To replace income the family would need to maintain their standard of living after the death of a wage earner. • To pay off a mortgage loan and other personal and business debts or to create a rent fund. • To create a fund for children’s education. • To pay final expenses, such as funeral costs and taxes. • To create a family emergency fund or a fund for a family member with special needs.
Not everybody needs life insurance. For someone who doesn’t have children, liabilities nor a spouse depending on income, there is little need for term life insurance. Someone not concerned with leaving an inheritance for any heirs would likely not need life insurance as well. A parent with children under age 18 should strongly consider term insurance to cover the period of time until the children are self-supportive and/or beyond higher education years. The breadwinner of a family should also consider term insurance to cover the period of time until retirement is anticipated to replace lost income and/or pay off liabilities such as the mortgage on a home. Term insurance is typically much cheaper than Universal or Whole Life Insurance because it builds no cash value and lasts only for a specific amount of time, such as 10 yrs, 15 yrs, 20 yrs, 25 yrs or 30 yrs. Universal and Whole Life have cash values that increase over time as long as premiums are paid into the policy. Universal Life b
Life insurance is an essential part of financial planning. One reason most people buy life insurance is to replace income that would be lost at the death of a wage earner. The cash provided by life insurance also can help ensure your dependents are not burdened with significant debt when you die. Life insurance proceeds could mean your dependents won’t have to sell assets to pay outstanding bills or taxes. An important feature of life insurance is that no income tax is payable on proceeds paid to beneficiaries.
