Life insurance is often a subject that people avoid talking about. Even though it is needed from a financial perspective, many do not want to think about the possibility of becoming too big of a burden for their loved ones.
Whether you wish to protect your family financially or provide for your loved ones should something happen to you, life insurance is necessary.
Below are the five reasons you should take the time to get life insurance.
Life Insurance Provides Collateral for Loans
You can also borrow money against your life insurance policy. This is known as “lending on the policy” or “loan value.” You can borrow up to 90% of the cash value of your life insurance policy or up to 50% if you are borrowing from an immediate-payout whole life policy.
When you borrow against a life insurance policy, your lender will take collateral in the form of that amount of cash value in exchange for their loan. If you don’t repay them by a specified date and time, they’ll be able to collect this collateral and use it as payment for their loan without any further obligation to pay back what was borrowed from them.
Life Insurance Can Help Pay off Debts
For example, you can structure the life insurance policy to pay off your mortgage and a portion of the home equity loan. If you’re still paying off student loans or credit card debts, you can use your life insurance policy proceeds to pay those off.
When you have a mortgage, it is essential to remember that life insurance can help you pay off your home. If something happens to you and your family does not have enough money to pay the mortgage, this could be devastating for them. Life insurance can help with this issue by ensuring that your family will always be able to pay their bills.
You Can Get Coverage Despite Health Conditions
While you may be wondering whether or not you can get life insurance with a health condition, the answer is yes. The insurance companies will look at both your risks and benefits. If having a certain condition means that it’s more likely for you to die younger than someone without that condition but still live an average lifespan overall, then an insurance company might still consider issuing life coverage.
Generally speaking, most people can qualify for life coverage if they are in good enough health or if they have a specific medical condition. For example, if you have high blood pressure (or any pre-existing conditions), then there is a good chance that you can get life insurance with high blood pressure.
Life Insurance Can Provide Money to Benefit a Specific Person or Charity
Life insurance is a great way to provide money for the people you care about. For example, you could use it as a way to leave money to your children or grandchildren. You can also set up a life insurance policy that pays out to charity after your death.
For the beneficiary of your life insurance policy—whether it’s yourself, someone else, or an organization—to receive money from your death benefit when you pass away, there must be specific language in place that explains how much will go where in case of death. These are called “beneficiary designations” and should be clearly defined in writing.
Life Insurance Can Pay the Costs of Final Expenses
The costs of final expenses are usually more than you think. The average funeral bill is $6,800, but it can be much more. Probate fees can also add up quickly if an estate needs to be settled. There are also indirect costs such as time off from work and loss of wages due to death that must be considered. Life insurance can help cover all these costs so your loved ones don’t have to worry about them when they should be grieving instead.
The Bottom Line
Get life insurance now if you have someone who depends on you financially. It is an intelligent way to protect your family’s financial future should the unexpected happen. It can be difficult to think about your own death, and it might seem morbid to even talk about it. However, life insurance is one of the most important things you can provide for your family.