For the most obvious reasons, plenty of people avoid even taking out a life insurance policy on themselves. While it signals a stage of life that people, in general, don’t really want to think about, getting life insurance is critical for other reasons. Life insurance isn’t just for paying out beneficiaries after you’ve passed. It can also be used to fund things such as college tuition payments and home purchases. It is also smart to take out life insurance early on in life, as it can be more expensive and difficult to get a high policy amount as you advance in age. Here are the six most important reasons to take out life insurance once and for all.
1. Life Insurance Is a Great Investment
Whenever someone creates a budget, they have to figure out how to spend their money on all the important things. Of course, there are housing costs, which can be high or low. After that, there’s utilities, and food, hobbies, and entertainment. Most people know that savings and retirement should also be part of their budget. While having an IRA or 401K is nice, life insurance is another type of investment that can be put in an easily manageable budget. Premiums are due monthly in most cases, so you can pay for your life insurance just as you would pay your car note. If you want a long-term investment that isn’t going to depreciate then life insurance is something you should include in your overall budget.
2. Taking Out Multiple Policies Is a Smart Financial Move
Say you start out taking out a small life insurance policy in the amount of $50,000. Depending on the kind of policy you elect to purchase, you can have one fully paid off in a matter of years. After that, you may start realizing that your lifestyle has changed and your family has expanded. Realistically, $50,000 may not enough to cover all your final expenses and leave your loved ones with enough money to survive on their own. There would be nothing to prevent you from getting a new life insurance policy, either with the same or a completely different insurer. Companies such as LifeNet Insurance Solutions offer
3. Life Insurance Becomes More Expensive As You Age
Life insurance providers recommend that you take out a policy in your 20s or early 30s for several reasons. First, a healthy non-smoking young adult is going to have much lower premiums than someone who is in their 50s and uses tobacco products. In fact, some types of life insurance policies can be purchased over a certain age. This is especially true when you start looking at policies worth $500,000 or more. This shouldn’t deter people from purchasing life insurance at any age, but everyone needs to be aware of how it works. The sooner you get a life insurance policy, the cheaper it is going to be for the insured party in the long run.
4. Protecting Your Family’s Future
Without life insurance, what would your family do if something tragic were to befall you? If you are the main breadwinner in your family, you have to do more than just put money into your retirement amount. Think about factors such as mortgages and outstanding car payments. In the event that you are not around to provide for your family, how would they maintain their current lifestyle? If you have a family member who is disabled, how would your family get the financial resources needed to pay for equipment and medical treatments? Investing in life insurance is basically just making certain that your family will have access to a large amount of cash that can be used to keep them flush for many, many years.
5. Life Insurance Can Be Viewed as a Tangible Asset
Whenever you talk to a financial advisor, you will be asked about your current debt load as well as your assets. Obvious things like property, recreational vehicles, and stock and bonds are mentioned immediately, but life insurance policies also have a tangible value. If you do have life insurance, it means that you have additional and tangible assets that can be used to inflate your total net worth. This can be important when going in to apply for loans, but more importantly, it helps to show just how on track you are, financially speaking.
6. Insurance Policies Provide Leverage
Sometimes in life, you need to take stock of everything you have available to get out of a serious financial bind. It might be that you are facing foreclosure on your home after being out of work for a long period of time. If you suffered a workplace injury and need to hire an attorney, things may look bleak unless you are able to come up with a lot of cash fast. Totaling out a car might require you to replace your vehicle, so you can continue to work, and you may not be able to wait until the appraiser completes the investigation. If you have a whole life insurance policy, you can cash out a portion of it almost immediately and use the funds to help offset the effects of major life events. Whether you are estate planning with your attorney or trying to get out of a financial bind, life insurance is valuable to have.
Having life insurance is a lot like having a bank account with a large balance or even a CD that you know is going to mature in the future and pay dividends. You can rest a lot easier knowing that your family will have additional funds available to help them keep living their lives. As long as you pay your premiums, your family is guaranteed to have access to a life insurance policy that can be used to make the transition into a new era a lot easier. Take out just enough to pay for your final expenses or invest in a life insurance policy that will help pay off the house, send the grandchildren to college, and allow your bereaved spouse to live a little better.