5 Reasons to Take Out a Life Insurance Policy

Life insurance is one of those things that everyone knows they need, but most put off getting, thinking they are young and healthy and don’t need to worry about it just yet.  For many families, this is a huge mistake, especially if you will be unable to sustain your current lifestyle with one less wage coming in.  In this article, we explain five reasons why life insurance is important.

1. Financial Security

Life insurance acts as a form of financial security for your loved ones should you pass away.  While you may be young and healthy at the moment, accidents do happen and in the worst-case scenario, isn’t it better that your family is taken care of financially?  This is especially important if your family relies on your income to survive.  Most life insurance policies pay out upon death, ensuring that your family is still able to pay the rent/mortgage and bills while they grieve.

2. To Cover Funeral Expenses

Even basic funeral services can cost several thousand dollars and most families don’t have this amount of money set aside.  While it is possible to pay in advance for your funeral, if you’re still young, this is probably something you don’t want to consider just yet.  Plus, there are risks involved with pre-paying for a funeral.  Life insurance gives you more of a guarantee that there will be funds available should the worst happen.  This will lift a burden off your family when they need it most.

3. Pay Off Debt

Not all debts are erased when you die, and this is especially true of any debts you may share with someone else, such as your mortgage.  Rather than letting your spouse take full responsibility for debts that they are unable to afford, take out a life insurance policy.  You can set up your policy to cover all of your outstanding debts, so that they are cleared in full upon your death.  The last thing your family needs while grieving is to be dealing with creditors and collection agencies.

4. Business Planning

If you run a business, life insurance is a necessity and not something that is optional.  This is especially true if you run a partnership, as both partners need a policy to ensure the other isn’t left holding all of the financial responsibilities of the company should a death occur.  Life insurance will help ensure that the business continues after your death and that none of your hard work goes to waste due to financial troubles.

5. To Cover Estate Taxes

Finally, if you plan to pass your estate to loved ones after your death, in some countries, they will have to pay a certain amount of tax on the assets they receive.  In some cases, this may mean they end up having to sell your assets in order to pay the fees.  A life insurance policy can help ensure this doesn’t happen by paying out a set amount that will cover any taxes that are due.

If you’ve been wondering whether life insurance is important, hopefully, this article has shown you that it is.