For many people the first exposure to life insurance is when an insurance policy is received from a relative or a “friend of a friend.” For others, there was a close friend or relative who died without adequate cover or life insurance. For me, I was introduced to a life insurance company where I had to make appointments with friends and family while I discovered the industry’s ends and outs and, hopefully, sell some.
But sadly this is how most people get life insurance-they don’t buy it, it’s sold to them. But is life insurance actually something you need, or is it just an irritation a salesperson put under your nose? While the latter may seem real, there are indeed many explanations why you should buy life insurance.You may want to check out FBN Insurance for more.
They need to realize that life insurance is absolutely necessary as they grow older, get married, start a family, or start a business. Only imagine a safety net, for example. Without a doubt you might be the world’s greatest tightrope walker. You might be able to perform without a net, but, “Why?” You love your life and those close to you, and you wouldn’t do anything that showed you felt differently. Let’s face it, we don’t have any power over the unpredictability of life or unexpected happenings. Just as a safety net covers the existence of instability with that in mind, so does life insurance. A sound financial plan provides an essential and basic framework. Over the years, life insurance has given many loving and conscientious people peace of mind in the knowledge that money would be available in a number of ways, including: 1. To Pay Final Expenses The expense of a funeral and burial will easily reach tens of thousands of dollars, and I don’t want my wife, father, or kids to suffer financially as well as emotionally when I die.
- To Cover Children’s Expenses Like most loving and responsible parents, it’s important to be sure that our children are well cared for and can afford a high quality college education. For this purpose it is absolutely essential to provide additional coverage when children are still at home.
- The surviving caring parent would need to replace that income, which is important to their lifestyle, if one parent passes away while the children are young. The surviving parent in charge would need to hire help for domestic tasks such as house cleaning, washing and cooking. Apply to that calculation if you are a single parent, assist with schoolwork and take your kids to doctor visits.
- To Pay Off Debts In addition to providing income to cover daily living costs, a family would need insurance to cover debts such as mortgage, so they wouldn’t need to sell the house to stay afloat.
- In a business partnership the partners need insurance on the survival of each other’s spouse. The explanation is that if one dies, the others will have enough cash to buy their interest from their creditors and pay their share of the liabilities of the business without having to sell the company itself. We have the same needs (because of the possibility that one of the partners can die), and buy insurance on each other’s life concurrently.
- To Pay Off Estate Taxes Estate taxes can be high, so it is important to have insurance in place to pay them to prevent jeopardizing retirement assets or funds built up. Use of insurance is most common in large estates for this reason, which uses lifelong (rather than term) insurance to ensure that coverage continues until the end of life.
- To Provide Living Benefits With medication advancements and rising healthcare costs, people live longer, but can’t afford to. Living insurance is an opportunity to use death income before the insured dies to help relieve the pressure on themselves and others with commitments or needs.
How much coverage do I need to buy?
The insurance policy’s face value, or “death benefit” (i.e. the amount of benefits paid to the beneficiary) should be sufficiently high to cover the after-tax income you would have received if you had lived a full lifespan, if you can afford the annual premiums for that amount. In other words, the insurance covers the money you have not had the opportunity to earn from living and working until you retire due to premature death.
Even though your income is no longer available, the proper amount of insurance helps your family to maintain their lifestyle. The actual amount you can buy depends on your current and likely future profits, any special circumstances that impact you or your family, and your existing incentive budget.