For many people, their first experience with life insurance is when a friend or acquaintance gets an insurance license.
Unfortunately, however, this is how most people acquire life insurance – they don’t buy it, it is sold to them. But is life insurance something that you truly need, or is it merely an inconvenience shoved under your nose by a salesperson? While it may seem like the latter is true, there are actually many reasons why you should purchase life insurance.
- To Pay Final Expenses The cost of a funeral and burial can easily run into the tens of thousands of dollars, and we don’t want husband/wife, parents, or children to suffer financially in addition to emotionally.
- To Cover Children’s Expenses We all want to be sure my kids are well taken care of and can afford a quality college education. For this reason, additional coverage is absolutely essential while kids are still at home.
- To Replace the Spouse’s Income If one‘s spouse had passed away while the kids were young, he/she would’ve needed to replace his/her income, which was essential to one‘s lifestyle.
- To Pay Off Debts In addition to providing income to cover everyday living expenses, family would need insurance to cover debts like the mortgage so they wouldn’t have to sell the house to stay solvent.
- To Buy a Business Partner’s Shares If you are involved in a business partnership, insurance on partner’s life is a solution to cosider. This will provide you with cash to buy his interest from his heirs and pay his share of the company’s obligations without having to sell the company itself.
- To Pay Off Estate Taxes Estate taxes can be steep, so having insurance in place to pay them is essential to avoid jeopardizing assets or funds built for retirement. Use of insurance for this purpose is most common in large estates, and uses permanent (rather than term) insurance to ensure that coverage remains until the end of life.
How Much Coverage Should I Buy?
The face amount, or “death benefit” of an insurance policy (i.e., the amount of proceeds paid to the beneficiary) should be high enough to replace the after-tax income you would have earned had you lived a full life, presuming you can afford the annual premiums for that amount. In other words, the insurance replaces the income you didn’t have the chance to earn by living and working until retirement due to a premature death.
The proper amount of insurance allows your family to continue their lifestyle, even though your income is no longer available. The actual amount that you should purchase depends upon your present and probable future incomes, any special circumstances affecting you or your family, and your existing budget for premiums. For any other questions we are there for you!