We hear the stories every day. People dying suddenly from heart attacks or freak car accidents. That makes us think, what if that happened to me? Consider these 10 reasons for owning life insurance:
- Debts — What happens to your debts if you die right now? Existing bills, medical and funeral costs can be a mountain of deb on which you strand your family without life insurance. Who covers the debts you have amassed already and those you leave behind?
- Your family may lose their home — Will they face foreclosure? Be forced to sell? They’ve just lost you; now they may lose their home, too. Who will be there to pay the mortgage when you can’t?
- Family lifestyle — Often, both partners in a marriage must work to sustain their families and lifestyle. Think of the vacations and Christmas mornings your income provides.
- Income for necessities — What about school for your children? Do you envision them going on to college? Who will pay when you’re gone?
- Your spouse’s sleepless nights — They already have to deal with an empty bed. How many sleepless nights will there be for them? Life insurance assures peace of mind
- The legalities — There may well be taxes and legal and probate costs to cover. Life insurance can leave tax-free money to your beneficiary to cover such expenses.
- Quality care for your kids — What about the expenses that health insurance doesn’t cover? Will they go to the better doctors? Does your son depend upon asthma medication? Does your daughter need braces? Will they one day? If so, who pays for that without you?
- Your extended family — With uncertain times, with retirement benefits vanishing, who will care for your parents as they are too old to care for themselves? Will you be there for them as they were there for you?
A few final considerations
It’s best to secure a life insurance plan when you are still young (ish) and healthy instead of waiting until you are older or when you are facing health problems.
Waiting too long could make it more difficult to even be eligible for life insurance. And if you are eligible, would it be at rates you can afford?
As we age, our health issues become paramount. Tomorrow you will be older than you are today. Tomorrow is promised to no one. The time to think of life insurance is today.
Is It Ever Too Late for Life Insurance?
Many people think life insurance is only for the young. They believe that life insurance is a tool best used by newlyweds with mortgages, parents of young children, and spouses who are both employed.
But what does that mean for seniors? Does that mean retirees have no need for life insurance? The answer to that question depends on your family’s needs as well as your financial picture upon retirement.
Your family’s needs
One of the biggest concerns among retirees whether or not they have enough money set aside to last their entire lives.
Since life expectancies are predictable, but an actual lifespan is not, retirees are left with an uncertain bet that the amount of money they saved for retirement is enough.
Sometimes, this bet is funded with a straight life annuity or pension that pays out like a straight life annuity. Both of these instruments could affect the surviving spouse’s income if the annuitant or pensioner dies and there is no death benefit.
When a surviving spouse stands to lose a portion of their income after the death of their spouse, then a life insurance policy can provide a much needed source of continuing income to replace the lost amount.
Another consideration is whether or not you would like to use death benefit proceeds to create a trust for your grandchildren. Leaving a trust account for their college or adult years can help take some of the financial burden from your children and your grandchildren as it may allow them to avoid student loans and other debt.
Funding the trust with life insurance proceeds takes the funding burden off of your spouse and creates a fixed amount for the trust.
Financial planning
Life insurance policies are great tools for making charitable donations after you pass on.
If your spouse is not in need of the death benefit proceeds you can set them up either in a charitable trust or by simply naming a charity as your beneficiary. This allows your surviving spouse to see all the good your donation will do, without it impacting his or her financial picture.
Depending on how well-planned your retirement has been you may accumulate some debt in your later years that can be paid off with your life insurance policy death benefit.
Debt as simple as a car loan, small home equity loan or even a loan for new furniture can cause undue stress to your surviving spouse and a life insurance death benefit is an easy solution to pay it off.
Another financial planning consideration is estate taxes. While life insurance death benefits are generally not taxable, the rest of your estate may be.
Instead of forcing your surviving spouse to liquidate assets or take funds from a retirement account to pay estate taxes or income taxes for the year you pass away, why not buy a life insurance policy to fulfill that need?
The takeaway
There are so many different ways that a life insurance policy can improve your surviving spouse’s and family’s lives, no matter what your age.
Without knowing what needs the future will bring, and what health complications could impact your ability to get insurance, the time to buy is now.
