The Top 15 Reasons to Get Life Insurance

Life insurance may not be at the forefront of your mind, especially if you’re young and healthy. However, it’s an essential investment if someone relies on you financially. The benefits of life insurance not only provide your loved ones with a payout if you pass away but offer financial security throughout your life.

What are the benefits of life insurance?

There are many reasons to get life insurance, but the reason you get a policy may change throughout your life. Here are the top 15 reasons why you may consider getting a life insurance policy.

1. Protect your family’s financial future

Life changes in the blink of an eye, and new circumstances come with new financial needs. As you outline your coverage needs at any age, consider the changes you and your loved ones will experience in the future, like buying a home, providing for children, traveling, or attending college. Your life insurance benefits offer financial security for whatever life brings.

2. Pay off debts and final expenses

When you pass away, your loved ones should be able to grieve and reminisce without worrying about money. Unfortunately, with average funeral costs around $8,000, families often turn to savings or debt to cover expenses. Plus, your family members could inherit some of your debts, like joint credit card bills or medical debt in some states. Final expense insurance provides affordable coverage for end-of-life costs, with modest payouts up to $35,000.

3. Create a financial safety net for your family

Permanent life insurance policies, which last through the end of your life as long as you continue paying premiums, accumulate cash value over time. That cash value offers you and your loved ones crucial financial security in the face of emergency expenses. If necessary, you can withdraw money from or take out a loan against the cash value of your insurance policy without undergoing a long application process.

4. Help your family maintain their current lifestyle

If your family depends on your paycheck, life insurance is more than a good investment; it’s a necessary precaution. Whether your income goes toward a mortgage, childcare, utilities, rent, car payments, or any other ongoing expense, your life insurance provides your family with a replacement for your income. That means your loved ones won’t need to leave their home or forego the lifestyle they’re used to if you’re gone.

5. Pay for your children’s education

College leaves many young people with enormous student loan debt. Your life insurance policy can help. If you choose a term life plan, you can plan for your beneficiary to apply their payout to college tuition. A whole or permanent life policy can even help cover the cost during your life. If your policy has accrued enough cash value, you can withdraw some of it to help cover tuition. Furthermore, life insurance loans offer an alternative to traditional student loans with fewer risks and barriers. If the loan isn’t repaid, it will simply reduce the remaining death benefit.

6. Support your spouse in retirement

Many Americans are unprepared for the high costs of retirement. The economic turmoil caused by the COVID-19 pandemic has made that reality starker as people turn to their savings and support systems to get by. According to a survey by PwC, 37% of adults are concerned that the pandemic has affected their ability to pay for retirement. With a life insurance policy, you can give your surviving partner the gift of retirement, regardless of how financially prepared you may feel today.

7. Leave a legacy

With a robust life insurance policy, the legacy you leave your family with will include not only the lessons you have imparted and the memories you have made but also the gift of financial security. As you choose a life insurance policy, consider your family’s future needs, considering life events like a down payment on a home or college tuition. One of the most meaningful benefits of life insurance is that it enables you to help meet those needs even after you’re gone.

8. Get peace of mind

Talking about life insurance is not always easy; it can be painful and frightening to discuss the eventual end of one’s life. However, knowing that your life insurance policy will protect your loved ones from end-of-life expenses offers great comfort. Even as you grow older or face health crises, you can be present and in the moment with the people who matter most instead of worrying about what the future holds for their finances.

9. Take advantage of tax benefits of life insurance

As long as you pay your premiums and the policy is active when you pass away, your loved ones will likely receive their death benefit tax-free. In addition, the annual growth of a permanent life insurance plan’s cash value is usually not taxable. Neither are withdrawals from that cash value up to the amount you’ve paid in premiums.

10. Reduce estate taxes

Even if you know you will leave behind a substantial estate, life insurance is still important. When assets are transferred to anyone other than a surviving spouse, the heir could owe taxes on certain estates that exceed the state’s tax exclusion limit, which is calculated based on its fair market value. Because life insurance payouts are generally not taxed, you can pass on a larger legacy that your family can use to cover estate taxes or any way they choose.

11. Cover business expenses

If you’re a business owner, your life insurance policy is an investment in your business’s future. Whether you’ve taken out business loans or have ongoing business expenses, including small business insurance or equipment costs, your life insurance policy can help. It protects any business partners from inheriting the financial burden and helps keep your company operating if you’re gone.

12. Use living benefits

Did you know you can benefit from your life insurance while you’re still alive? If your permanent or whole life insurance policy has already gained cash value, you can tap into it to cover unexpected expenses. In addition, many insurance providers offer riders you can add to a policy for more support. For example, a living benefit or terminal illness rider allows you to apply a portion of your policy to your long-term or intensive medical care.

13. Provide for a stay-at-home spouse

Life insurance is equally important for families that include a stay-at-home spouse. If your spouse relies on your income so they can care for children, the household, or other relatives, your life insurance benefits will help them maintain financial security. Life insurance is equally important for stay-at-home spouses, as the payout can cover the cost of childcare, caregiving, and maintaining a household. So it’s essential that life insurance policies are in place for both parents, regardless of how many paychecks come in.

14. Make a charitable donation

Even if no one depends on your income and you have adequate savings to cover end-of-life expenses, you can use your life insurance policy to support a cause you believe in or an organization doing work you value. By naming a charity as your life insurance beneficiary or transferring an existing policy into an organization’s ownership, you can make a meaningful difference.

15. Provide for a disabled family member

If you have a disabled family member who depends on your income to thrive, it is absolutely critical to plan for the future. As you calculate your life insurance coverage needs, be sure to factor in any caregivers, accessibility aids, and medications you currently cover for your family member. By designating them as a beneficiary of your plan, you can ensure they have support even after you’re gone.

Get all the benefits of life insurance at an affordable price

Life insurance is not only a worthwhile investment for people at all stages of life, but also an affordable one. Even if you’re operating on a modest budget, the wide range of life insurance plans available virtually guarantees that you can find one to suit your needs. Get a quote online today or reach out to a licensed agent to begin your search for the life insurance you need.