Why Is Life Insurance Important?

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Regardless of how much you earn and how well off you are now, you can never tell what the future has in store for you. You may wake up one day and lose your job or be diagnosed with a critical ailment that wipes out your hard-earned money in seconds.

That’s why having life insurance is important. Whatever happens, life insurance is the light at the end of the tunnel, helping to protect your family, loved ones, and business during devastating times. Find out 11 reasons why you should consider buying life insurance.


11 Reasons Why You Might Need to Keep Life Insurance By Your Side

Life Insurance: A Brief Overview

Life insurance is a legally binding contract between a policyholder and an insurer. In exchange for financial security and extra benefits, the policyholder must pay predetermined policy premiums to keep the coverage in effect throughout their lifetime or for a fixed term.

Once the death payouts are cashed out, the policyholder and their named beneficiaries can use it for whatever they want, such as funding for retirement, buying a home, paying for college, covering childcare and living expenses, etc.

Life insurance is categorized into five types:


Top 11 Reasons to Buy a Life Insurance Policy

Here are 11 reasons life insurance could be the best “investment” you have ever made to secure your future.


1. Life Insurance Helps Deal with Debts

A survey stated that millions of Americans are indebted with different debt levels until they pass away, ranging from student loans to credit card debt and mortgages.

So if you don’t want to leave your family holding the bag on repaying your debts, life insurance may help. Following your death, life insurance can help settle these lingering debts by directly paying the lenders, or your loved ones can do so on your behalf after receiving the death payouts.

Why is life insurance important? Life insurance helps pay off lingering debts and bills.


2. Life Insurance Leaves an Inheritance

Understandably, you want to give as much financial contribution as possible to your loved ones’ lives, even after your death. In a way, life insurance is a great way to leave a non-volatile inheritance since your named beneficiaries will not have to pay income taxes on the received death benefits. Unlike the stock market or other high-risk investments, the amount of benefit signed in the contract is how much your loved ones will get after completing the claim process. So a death benefit of $300,000 remains $300,000, no more, no less.

Why is life insurance important? Life insurance is a great way to leave a tax-free inheritance for your children.


3. Life Insurance Supports Retirement

Among various ways to prepare for retirement in advance, such as 401K, IRA, or traditional savings, correctly implementing life insurance can immensely support your retirement planning. These days, life insurance has been curated and developed to align with each individual’s evolving needs. These types of policies typically come with a cash value component that allows policyholders to make investments and use the profit as an extra source of income to cover various aspects of the post-retirement lifestyle, including healthcare costs, assisted living expenses, and long-term care.

Why is life insurance important? Life insurance is an ideal instrument for complementing your retirement plan.


4. Life Insurance Protects Businesses

Having a life insurance policy in hand can help take care of your business and secure your staff’s well-being by contributing a financial boost to your business when something goes wrong. In the case of joint business ownership, you and your partner can create a buy-sell agreement with payouts equal to each person’s company share. Following the death of a partner, the survivor will have an adequate amount of cash to buy out their interest, allowing the business to keep operating and avoiding complications with share transfer.

Why is life insurance important? Life insurance takes care of your business and keeps your employees afloat if something happens.


5. Life Insurance Helps in Saving Taxes


The tax advantage is one major reason that motivates numerous people to purchase life insurance. Some policies allow policyholders to have tax deductions on the paid premiums. Another tax-saving benefit of life insurance is to mitigate estate or inheritance taxes. When you leave an inheritance to your loved ones, these assets are heavily taxed. The death benefits of life insurance are an ideal safety net for reducing the cost of estate taxes.

Why is life insurance important? Life insurance often comes with a tax advantage that allows you to mitigate or cover income taxes.


6. Life Insurance Serves As a Saving Tool

In a way, life insurance can be used to save money in addition to traditional savings accounts. It returns attractive interest on your money after a fixed period of time. Still, the only difference is that it includes some protection against unforeseen events or critical illness diagnoses that could break the bank. Everything comes with a cost, so weigh the pros and cons before depositing your money.

Why is life insurance important? Life insurance is a saving alternative with high-return interest and additional protection.


7. Life Insurance Helps Achieve Goals

In addition to being a tool to keep your loved ones safe from mishaps and secure their future in your absence, life insurance has evolved over the years to satisfy every need and help each individual accomplish finer things in life.

Since it is a safe instrument for savings and investments, it could help you achieve specific long-term financial goals, such as buying a house or a car for your parents, covering your children’s education, planning a wedding or retirement, etc.

Why is life insurance important? Life insurance helps families meet specific needs and accomplish their financial goals.


8. Life Insurance Offers Greater Peace of Mind

Since life is full of good and bad surprises, having life insurance on hand means you and your loved ones can stay prepared and avoid financial strikes that could lead to bankruptcy. Whether the policy is big or small, it is still better than nothing at all.

Why is life insurance important? Life insurance helps reduce stress when dealing with costly affairs and matters like a critical illness diagnosis or a lawsuit resulting from a car crash.


9. Life Insurance Replaces Lost Income

If you are the sole breadwinner of the household, keeping life insurance by your side is essential. It ensures that your loved ones will not face financial hardships if something happens to you. Without your monthly income, your spouse and children can rely on the death payouts to maintain their lifestyle and afford necessities for the next couple of years after you are gone.

Why is life insurance important? Life insurance helps replace income loss as a result of disability or work-related injury.


10. Life Insurance Covers Funeral Expenses

With the median funeral cost fluctuating between $7,000 and $10,000 depending on services and locations, life insurance, including an end-of-life policy, is helpful in planning for a funeral while keeping your loved ones and family at ease, especially if your passing is unexpected. It generally pays out death benefits, and your family can use it to cover services and incurred costs, including a memorial service, flowers, obituary, legal support, estate taxes, and so on.

Why is life insurance important? Life insurance can help the beneficiaries take care of costly funeral expenses.


11. Life Insurance Helps Afford Elder or Disability Care


If you are a primary caregiver for your elderly parents or disabled siblings, life insurance makes sure that they can afford the specialized care services they need to keep their lives on track in the event of your death. A life insurance policy can help cover assisted living facilities, home health aids, hospice care, medications, visiting nurses, and more.

Why is life insurance important? Life insurance allows your aging or disabled loved ones to afford specialized care and maintain their lives after your passing.


If you have any questions about the importance of life insurance, please contact us for a free consultation. 


Quotetopia matches you with what you’re looking for! We make your search a single step based on coverage and cost information from hundreds of top insurers, connecting you with the best match at the best value. From auto to health to life insurance, Quotetopia has you covered. 

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