Life insurance has become one of the necessary assets nowadays but far too few people have it. If you are young and relatively healthy, it will be very easy for you to buy an insurance plan. But if you wait, there is a high chance of something happening before you get coverage.
Maybe you think that you might not need it now and you will get it after some time as it’s on your to-do list. But wait! Do you know getting life insurance at an older age with relatively bad health conditions can be costly for you? Yes! That’s right. Meanwhile, if you are still confused about whether you should buy life insurance, here are some important reasons to explore.
Also Read: Can You Buy Life Insurance for a Family Member? A Guide to Insuring Your Loved Ones’ Future
In this blog post, we will learn why getting a life insurance plan is so important. Let’s get started.
Top 12 Reasons to Buy a Life Insurance Plan
1- Secured Financial Future
Life insurance will provide financial security to your loved one after your untimely demise. The death benefit of a whole life insurance policy will be beneficial for your family or other dependents. After your death, the designated beneficiary will get a lump-sum payment (death benefit) that is guaranteed to be paid in full. Life insurance is an important protection that you can consider for whom you care about even when you are not there.
2- Income Replacement
Do you consider what would happen if you died all of a sudden? It could be truly horrible if your family survives solely on your income. At this point, the life insurance plan gets you covered. So if you don’t want to leave your family helpless for monthly bills and daily life expenses, get yourself adequate coverage.
3- Cover Final Expenses
Nowadays even a basic funeral service has become very expensive, like several thousand dollars. Another way to prepare your funeral expenses well before time is to pre-pay to any funeral home provider, but most of us don’t even think of it. When you have a life insurance policy and you die, the insurance company has to cover your end-life expenses.
4- Pay off Debt
After your death, your debts will become a nightmare for your family. Just because you die doesn’t mean your debts are over. In case you and your spouse have co-signed for a loan or a mortgage, your partner will ultimately be responsible for the payment. Life insurance policy assists those who leave behind any financial responsibilities.
5- Educational Expenses
No doubt, there are a lot of ways to save money for your kid’s education rather than a life insurance policy. But insurance payout can be a good addition to your savings. In case of any mishap with you, the insurer will proceed and help your child to continue his education by paying for his expenses.
6- Cash Value Growth
When you opt for whole life insurance, it provides you permanent coverage that ends when or if you cancel the policy. Moreover, it also permits you to build up a cash value with time, an attractive feature for many people. The money built up from cash value comes in handy whenever you are stuck in some financial emergency.
7- Dividend Potential
One of the main perks of getting insured is that you will be eligible to get dividends. Although these are not guaranteed when you are awarded you can take them in cash. You can use them to pay your premiums or to buy paid-up additional insurance that can increase your coverage and cash value.
8- Optional Riders
A lot of options are available to tailor your whole life insurance policy according to your needs and requirements. For some additional cost, you can use riders to buy protection without further underwriting. It will help you to pay the premiums if you become disabled in the future and can’t pay the premiums. However, some of the amounts can also be used to pay for a chronic illness or to buy a coverage plan for your child.
9- Business Planning
If you are running a business, having a life insurance plan would be very beneficial for you. It helps you to cover your obligations so that your hard work and time don’t go to waste. Meanwhile, if you are doing business in partnership with someone else, you should both get insured. So that when one dies, the other one is not left behind to face a heavy financial burden.
10- Affordable Coverage
Most people say that they can’t buy an insurance plan as it’s too costly but that’s not the fact. Truthfully, coverage of insurance plans is very affordable for most of us. The younger and healthier you are, the lower your premiums will be. Moreover, with no pre-health condition and not being involved in smoking you can get coverage for as low as $1 per day.
11- Tax-free Face Value
After the death of a policyholder, the insurer will pay face value to the designated beneficiary. That face value, also called the death benefit, is tax-free. It means your family doesn’t have to pay any tax on the money they get from the policy as it will not count as their income.
12- Mental Satisfaction
Life is very unpredictable and death is the bitter ending of everyone’s life. Having life insurance as an investment means you are prepared for any misfortunate incident. Even if you own a small policy, you will find it a little easier and lighter by knowing that your family will have protection and a backup plan in case something happens to you.
The Bottom Line
Understanding the importance of insurance plans is important. It would also help you to search and find a policy that better fits your needs. A life insurance plan will greatly help your family by paying off outstanding debts, bearing educational expenses, and providing support in a tough situation like protecting a business or support during retirement.
Frequently Asked Questions (FAQs)
1- Who needs to buy a life insurance plan?
If you think your death can be a financial burden for your loved ones or relatives or you have any dependents behind you, you should get a life insurance plan.
2- What are the different types of life insurance policies?
Mainly there are two types of life insurance coverages. Term life insurance and permanent life insurance. However, both of them have some types.
3- How much life insurance do you need?
The amount of coverage you need depends on the reason you are getting the policy. First, evaluate your needs then research and find out the right amount of coverage for you and your family.
4- Why get a life insurance plan?
One of the most common reasons Americans buy an insurance plan is to cover their end-of-life expenses. Another important reason is that they want to leave an inheritance for their loved ones, followed by building investment and replacing an income.