Why Do I Need Life Insurance?
Life insurance provides cash to your beneficiaries after you pass on. This can help your family replace your income, cover your final expenses or major ongoing expenses from mortgage payments to providing funds to pay for caregivers. Moreover, life insurance benefits are free from federal income taxes.
Life insurance is for the living--it allows you to fulfill your responsibilities to loved ones after your passing.
Important reasons for buying life insurance:
You have dependents - children or other family members (spouse, aging parents, sibling) - and want to be certain that your loved ones are taken care of. This includes:
- Income replacement
- Mortgage protection
- College funding
- Funds to pay for a caregiver or care for a loved one with special needs
- Retirement income funding
You want to ensure that your last expenses do not burden your loved ones and provide cash when it’s most needed. This includes:
- Funeral expenses
- Outstanding debts
- Estate taxes
You want to leave a legacy to your favorite charity, religious organization or other institution
You have dependents
Would your spouse be able to maintain your family's standard of living or pay the mortgage without your income? Your savings and Social Security may not be enough to cover your spouse's ongoing living expenses or provide for a comfortable retirement. As a result, your spouse could face a serious financial burden without the security of your income.
What about your aging parents, or sibling or other family member with special needs – can they afford the care they need without your income?
Life insurance is also important if you are a stay-at-home parent or spouse. Even though you may not be earning a steady income, that doesn't mean you don't work or that your work isn’t valuable. Could your spouse afford to pay someone to take over your responsibilities?
Even if you are not worried about paying off your mortgage or funding educational or caregiving expenses, life insurance is still a worthy investment.
You want to ensure that your final expenses do not burden loved ones
In 2020, average funeral expenses amount to $7,500 1. Many of us also have various outstanding debts such as credit cards, auto and other loans. Plus, depending on the size of your estate, it may be taxed by as much as 45%. Is your life insurance coverage sufficient to meet these expenses?
Your life insurance benefit is payable immediately upon your death, enabling your beneficiaries to cover your funeral and other final expenses. And life insurance benefits are federal income tax-free. Your beneficiaries will receive the full amount you intended to provide.
You want to leave a legacy to your favorite charity, religious organization or other institution
You can use life insurance funds to provide a legacy for your favorite charity, religious organization or other institution, helping support work that is meaningful to you.
1 https://www.aarp.org/home-family/friends-family/info-2020/paying-for-cost-of-funeral.html
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