Life insurance is designed to pay for an individual's funeral costs, debts, taxes and other expenses after his or her death. It is particularly beneficial for young families with children, individuals with dependents or those who want to ensure that they are able to provide for their loved ones even after they are gone. Many people purchase life insurance with an eye on both immediate and long-term monetary needs.
Short-term financial needs are often quite pressing after a death in the family. Funds that are in joint bank accounts or that are payable on death will generally be accessible to beneficiaries, but they may not be sufficient to provide for the often excessive costs that confront families who are facing an unexpected loss. Although many estates move quickly through probate court, having ready access to insurance funds can provide an appreciated, extra layer of security to families during a difficult time.
A parent with minor children or an individual with dependents who rely on his or her earning capacity will be more likely to consider life insurance as a way to provide for long-term needs. Long-term needs may not be as great as short-term needs, particularly if children or dependents are likely to become self-sufficient soon. Families with younger children may need more life insurance while families with older or adult children will often need less. The life insurance funds then become a valuable safety net that continues to provide a layer of support over time to the deceased individual's loved ones and ensure they have their financial needs met.
Other reasons you might face include:
Aside from getting a life insurance policy, it’s important that you buy a large enough plan for your family members. Not having enough life insurance coverage is one of the worst mistakes that you can make for your loved ones. When you’re applying for insurance coverage, there are several key factors that you should calculate to determine how much insurance coverage that you’ll need to buy.
The first number that you’ll need to look at is your debts and major expenses that your family would be left with if you were to pass away. The primary goal of your life insurance coverage is to give your family the money that they would need to get out of the pit of debt that your passing would leave them in. Most people have a large mortgage payment that their family would be responsible for, and those bills can put your family under serious financial strain. Your life insurance plan will ensure that they have the money that they need, which means that you should add up your debts and final expenses to make that they have enough funds.
The next number that you should crunch is your annual income. If you’re one of the main income earners in your home, then your family would struggle financially if you were to pass away. Your life insurance protection will give your family the money that they need to replace your paycheck and pay for any necessary expenses. Your coverage will ensure that they have the money that they need to get through the grieving period without having to worry about basic expenses.
Another factor that you should consider is any funeral expenses or burial fees that your family would have to pay for after you passed away. The average funeral can cost $10,000, which can be a difficult bill for your loved ones to cover, but that’s where your life insurance comes in.
After you’ve calculated your life insurance needs, you might be surprised to see just how much life insurance your family would need, but don’t worry, that coverage can be cheaper than you might imagine. There are several ways that you can lower your rates and keep more money in your pocket. Making some simple changes can save you thousands of dollars on your insurance coverage.
The best way to do that is by cutting any tobacco that you currently use. If you’re listed as a smoker on your insurance application, then you should expect much higher premiums for your plan. In fact, smokers are going to pay around twice as much for their coverage versus what a non-smoker is going to pay for the same sized policy. If you want to save money, kicking the cigarettes is one of the best ways to do that.
Another way that you can save money is by improving your overall health. Before the insurance company gives you life insurance, they are going to require that you take a medical exam, and the results of the medical exam are going to play a huge role in how much you pay every month. If you want to save money, then you will need to get better results from the medical exam. If you’re overweight, then you can pay as much as 50% more for your insurance coverage. Getting regular exercise and sticking to a regular diet can save you thousands of dollars on your life insurance coverage every month.
Life insurance is one of the best purchases that you’ll ever make for your loved ones, and it’s important that your family has the coverage that they need. If something tragic were to happen to you, then your family would be responsible for a massive amount of debt and other final expenses. Losing someone that you love is never going to be easy, but being left with a massive amount of debt is going to make the situation that much worse.
You never know what’s going to happen tomorrow, which means that you shouldn’t wait another day to get the insurance coverage that your family deserves. If you have any questions about life insurance or the different options available, please contact one of our agents today. We would be happy to answer those questions and connect you with the best plan possible.