You might have an idea of what the future holds, but nothing is guaranteed. It’s impossible to know where life will take us and while that might be fun sometimes, it’s important to prepare for all sorts of outcomes. When you take action over the things you can control, you can live with less stress and worry, and feel free to enjoy a life you worked hard for.
Life insurance is the ultimate form of peace of mind. It allows you to focus on the time you have with your loved ones while knowing everything will be taken care of even when you aren’t around anymore. While it might feel daunting to talk about something like life insurance, you’ll end up feeling relief once it’s all taken care of. Here are some reasons to take steps towards sorting out your life insurance policy today. You might even find that a loved one needs some encouragement to get started on theirs too!
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#1. Worry less about the future so you can focus on the present
Life is stressful enough, the last thing you need to worry about is what would happen to your family if you suddenly passed away. When it comes to living stress-free, it’s important to take control of what you can, and let go of what you can’t. Investing in a life insurance policy will allow you to continue living without less worry about what could go wrong.
It’s natural to have thoughts about things not going according to plan, what’s important is making sure you’re prepared for the worst-case scenario. If you know you’re prepared and everything is taken care of, you can focus on time with friends and family, making the most out of each day. Life insurance is often that thing everyone puts off until it’s unavoidable. Instead of leaving it on your perpetual to-do list, give that spot to something else you could lend your time to.
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#2. Covering debt and everyday expenses
CNBC reports an astonishing average household debt of $90,460. These numbers consider student loans, mortgages, and traditional credit card debt. If you consider a household taking on this amount of debt while losing an entire source of income, it starts to sound a little scary.
When you get life insurance, you reduce the responsibility of your loved ones. They have enough stress and grief to handle. Protect them from debt and construct a plan to support them after you’ve gone. A life insurance policy pays out much faster than any financial recovery source. Even if your family stands to receive plenty of money through your estate, a life insurance policy would allow them immediate access to funds for bills and any expenses that your paycheck would typically cover.
You might not think about how quickly your daily and monthly expenses add up if you’re used to a continuous source of income. However, this is something that your loved ones will be faced with from the moment you’re gone. Survivors are often left with bills and debts of all amounts, and a life insurance policy is the easiest way to protect your family from these expenses.
Other debts you can consider when you construct your financial plan are mortgage payments, car loans, and anything else your family could be left on the hook for.
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#3. Leaving an inheritance
If you plan on leaving behind any assets, then it’s important to learn about what your options are. Leaving an inheritance is a helpful way to ensure that none of your money or property winds up in the wrong hands. Not only that, but you can allocate money to specific beneficiaries for specific reasons. You can put aside money for a child to receive for their education or job training, as well as lump-sum amounts awarded by a certain age or after specific requirements are met.
An interesting point to note with inheritance is the tax exemption. While every state is different, in general, the income that your beneficiary receives as an inheritance is not taxable. Rather than leaving everything to the estate, you can ensure a certain amount of money is left to a particular beneficiary. The more you have to leave behind, the more you’ll save, within certain limits of course. However, no matter the amount, it’s much better to know it’ll go to your loved ones rather than the IRS.
It should be noted that this information is meant to provide general guidance. Official tax information is available on state and federal government websites.
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#4. Covering funeral expenses and end-of-life costs
People often underestimate funeral costs and other end-of-life expenses. Making financial decisions while under emotional stress can also lead you to spend much more than planned. If you plan, your family won’t need to worry about taking on unexpected expenses. According to the FTC, a casket alone can cost anywhere between $2,000 and $10,000. So, you can only imagine how quickly everything adds up. You also might need to make sure you adhere to certain cultural traditions and this is the perfect time to make sure your family will have whatever they need to carry out the proper ceremony. It certainly isn’t pleasant to talk about these kinds of life events, but they happen every day and it’s important to be prepared.
Even if you don’t plan on having some fancy casket or even a burial at all, it’s important that you have a clearly laid out plan. As mentioned before, people can become impulsive when it comes to making financial decisions based on emotion and grief. You can save your family the guessing and let them know exactly how you want everything done. Not only can you make these decisions ahead of time, but if the cost is all built into your life insurance plan, all your loved ones will need to do is honor your memory.
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#5. Financial Support during your lifetime
While it might not be the first benefit you think of when life insurance is on your mind. Some life insurance policies benefit you while you’re alive. If you keep up with your payments, you can benefit from it in a couple of ways. You can use it as collateral if you want to take out a loan, or even borrow from it without paying taxes.
In this way, life insurance works as a way for you to build your life, rather than focusing on the end of it. If you need a small loan to kickstart a business or even make a down payment on a new home, borrowing against a life insurance policy might give you the leg up you need. Of course, when it comes to these options, you should speak with your insurance representative or financial advisor when agreeing to any policy terms.
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Conclusion
The overall goal with life insurance is achieving peace of mind. Like all insurance, it is designed to protect either you or your loved ones from financial loss and other material hardships. You want to make sure your loved ones are covered in the event you aren’t around. In a less traditional sense, life insurance can even help you with significant financial milestones while you’re still around! Learning about life insurance and investing in a policy is the right move for anyone who wants to plan for the future and live in the present.