The Importance of Purchasing Life Insurance

by Jeff Rose on June 7, 2013

The Importance of Purchasing Life InsuranceLife insurance is not something that many people tend to think about; mainly because they often operate with the “it won’t happen to me” mentality.

Unfortunately, death visits everyone at some point or another, and if you aren’t backed by a life insurance policy in an unfortunate event, your family could suffer greatly.

Why is it so important to purchase life insurance? What are the benefits right out of the gate as well as beyond the claim?

Life Insurance Helps Pay off Debt and Other Expenses

When a person passes away, many expenses pop up that the deceased’s family can have a hard time tackling. For example, the family might be saddled with funeral expenses, medical bills, remaining loan debt, mortgage payments, and other expenses that the deceased leaves behind. A life insurance policy can make it very easy for the family to pay off these remaining debts so that they don’t have to take over responsibility.

Support Your Loved Ones After Death

If you are the primary caregiver and supporter for your family, they could find it difficult to get by once you are gone. If you have a two income family, then getting a second to die life insurance policy could be the best option. Once again, a life insurance policy can easily ensure that your family is taken care of in the event that you pass away.

You Have Options

Many people shy away from life insurance because they immediately assume that it would be too great of a monthly expense, and there probably isn’t a policy that specifically covers what they need.

In general, there are two types of life insurance; term life and whole life. Term life insurance is essentially a type of policy that only lasts for a certain amount of time, and during that time, the policy holder will make the specified monthly payments. After the term ends, the insurance policy coverage also ends and the customer once again must make the decision whether to continue or discontinue coverage. On the other hand, whole life insurance is a policy that extends for the rest of the policy holder’s life.

Not only can you choose either route to take with your life insurance policy, but you can also customize it to meet your specific needs. If you’re a stay-at-home spouse, you might want to customize the plan to cover household expenses, carpooling and childcare. Even if you grow older and you’re no longer responsible for other people, you can further customize the coverage to where it is no longer designed to support other people under you. There’s a solution for practically anyone.

Your Credit Rating Can Benefit

Because life insurance can be considered as an asset, it is very possible that holding a life insurance policy could increase your credit score. This is all dependent on the type of policy as well as other factors, so it would be a good idea to check before assuming that it will bear a benefit for your credit score.

The Cost of Life Insurance Increases with Age

Lastly, life insurance doesn’t get any cheaper as you grow older. As you age, the probability for death increases, and life insurance companies typically charge more because of this. This is why it could also make financial sense for younger people to get life insurance policies. If the policy is described as “guaranteed level term,” this means that the payout amount is locked in as soon as you purchase the policy.

Overall, it’s wise for practically any adult to start thinking about purchasing a life insurance policy. It’s impossible to know when that unfortunate time will come for anyone, so it’s best to stay prepared to avoid leaving a financial mess for your family.

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