Here are a few other reasons why having life insurance is important.
1. TO BRING PEACE OF MIND
We can’t know when we’ll pass away. It could be today, tomorrow or 50 years from now, but it will happen eventually. No amount of money could ever replace a person. But more than anything, life insurance can help provide protection for the uncertainties in life. Without a doubt, having life insurance coverage will bring you and your family peace of mind. It’s one thing you can be sure of and you’ll no longer have to question whether they’ll be taken care of when you’re gone. Life insurance protects your heirs from the unknown and helps them through an otherwise difficult time of loss.
2. Short-term family needs
Upon your death, would your spouse or partner be able to pay the rent? Afford the bills? How about pay for funeral, burial or cremation costs, which average between $5,000 and $10,000?1
At a time of great emotional stress, financial concerns can pile on — especially if they are forced to move, re-enter the workforce or make other significant lifestyle changes.
Would you leave behind significant credit card debt or student loans? If you’re young and your parents cosigned on your loans, they may be liable for your debt. If your loan includes an acceleration clause, your parents may have to pay off the loan immediately.
Life insurance can help keep your family members from having to tackle large financial issues when they may be least equipped to do so.
3. It can be an additional source of funds
All life insurance is not the same. While term insurance is just that — a temporary policy that lasts for a specific time period and then ends — permanent life insurance is meant to cover you for the remainder of your life.
Permanent life insurance also accumulates cash value. Each policy may differ, but typically you can use it to withdraw cash, take a policy loan to borrow cash you repay later, or terminate your policy and take its value in cash.
Many people use cash value to help fund important events in their lives, such as a college education or additional income in retirement.
4. Just married
If you’ve recently become engaged or married and are joining families and assets, it can make life easier to know you are both covered if one of you were to die. Life insurance enables you to make financial contributions to your partner’s well-being after you’ve departed – which is a beautiful way to honour your marriage vows.
5. You have extreme hobbies
If you’re a thrill seeker with a penchant for extreme sports, you’ll probably be deemed higher-risk by a life insurance company. But it’s similar to having a high-risk job — you’ll pay more to be insured, but the cost is worth it considering the likelihood you’ll die from unnatural causes.
If you do have an extreme hobby — like rock climbing, scuba diving, or something equally thrilling — it’s best not to lie about it on your life insurance application. If you die within the first two years your policy is active and you didn’t disclose your regular high-risk activity, the insurance company has the right to decrease the death benefit, or cancel it all together.
6.TO LEAVE AN INHERITANCE
Even if you don’t have any other assets to pass to your heirs, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries. This is a great way to set your kids up for a solid financial future and provide for any monetary needs that will arise.
7. Life insurance can help you leave a legacy
When you purchase life insurance, you choose at least one beneficiary — the people or entities that would receive a benefit from your policy.
In addition to naming family members as beneficiaries, some people choose to name their church, favorite charity or nonprofit organizations that supports causes they care about.
In some cases, life insurance can enable you to give in death more than you might have been able to donate to the cause during your lifetime.
8. Having a new born
The cost of raising a child is expensive, even before factoring in considerations like private education and university contributions. There are policies available that run until your child reaches maturity – and after they’re 18, it’s up to you what “maturity” means.
Providing for your child to protect them against the unexpected is a way to give yourself peace of mind and enjoy the present with them more fully.
9.Buying a new home
If you die before your mortgage is repaid, then the responsibility to complete payments falls to someone you love. Life insurance enables you to be proactive about ensuring those you care for can meet those financial commitments after you’ve gone.
10.Your job is high-risk
“At the end of day, life insurance is risk management” to deal with “premature death, loss of income due to illness, or disability,” according to Silvia Tergas, a financial planner with Prudential.
If you work in a dangerous or high-risk environment, you have a greater chance of dying than someone who sits at a desk all day. Jobs in aviation, construction, firefighting, mining, oil and natural gas, and a few others will almost always result in a higher premium.