For many people, “life insurance” sounds like something only the rich and famous get for their heirs or is only something someone needs to worry about when they get “old.” But that’s the same thinking that makes a roofer super busy once it starts raining!
It’s also the same kind of thinking leaves many family members in a “bind” when one of their loved ones dies without owning any life insurance in place. And let’s be clear: we’re not just talking about those who die without life insurance and who have dependent spouses and children that need to be taken care of; we’re also talking about those who either are aware of or haven’t considered how much money it would take to pay for a proper burial.
This is why…
We wanted to take a moment and discuss some of the most common questions we get from folks worried about what might happen if they or a loved one of theirs were to pass away without a life insurance policy suddenly.
Topics that will be addressed in this article will include:
- Why is it a good idea to purchase a life insurance policy?
- Does everyone need to buy a life insurance policy?
- Can someone purchase a life insurance policy for someone else?
- What can I do to help me find the “best” life insurance policy?
So, without further ado, let’s dive right in.
Why is it a good idea to purchase a life insurance policy?
In our opinion here at IBUSA, the number one reason why it’s a good idea for someone to purchase a life insurance policy is because it provides an immediate asset for your loved ones in the event of your death.
Immediately upon approval (provided you have purchased a traditional term or whole life insurance policy), your beneficiaries gain a tangible asset that will give a death should you die while the policy is enforced. The proceeds from such a life insurance policy can be used to pay for expenses such as funeral costs and outstanding debts and can also provide financial security for the long term.
So, in our opinion here at IBUSA, purchasing a life insurance policy is a good idea if you want to protect a loved one financially.
Does everyone need to buy a life insurance policy?
There is no one-size-fits-all answer to this question, as everyone’s financial situation is different. Some people may not need a life insurance policy, while others may strongly need one.
Factors to consider when deciding whether or not to purchase a life insurance policy include your age, your income, your assets, the number and ages of your dependents, and your debts. If you have a spouse, children, or other dependents who rely on your income to meet their financial needs, purchasing a life insurance policy may be a good idea. Or if you don’t have anyone financially dependent upon you, but your estate wouldn’t be able to cover the cost of a burial or cremation. It might be a good idea to purchase a final expense insurance policy.
On the other hand, if you are single and have no dependents, and your estate would be able to cover the cost of a burial or cremation, you may not need a life insurance policy.
Can someone purchase a life insurance policy for someone else?
Yes, one person can purchase a life insurance policy for another person. This is known as “insurable interest.” To buy a life insurance policy on someone else, the person purchasing the policy (the policyholder) must have an insurable interest in the person being insured (the insured).
This means that the policyholder must have a financial interest in the continued well-being and survival of the insured. For example, a spouse may have an insurable interest in their partner, a parent may have an insurable interest in their child, and a business owner may have an insurable interest in a key employee.
To purchase a life insurance policy on someone else, the policyholder typically must have the insured’s consent and provide evidence of insurable interest to the insurance company. It is also important to note that the policyholder and the insured do not have to be related. For example, a business owner could purchase a life insurance policy for an employee. However, to buy a life insurance policy on someone else, the policyholder must have a legitimate financial interest in the continued well-being and survival of the insured.
A common situation we’re presented with here at IBUSA is when one family member wants to purchase a burial life insurance policy on another family member because they understand that if their loved one were to pass away, they would be left with the funeral costs. In situations like these, the insured loved one either doesn’t want to purchase their life insurance policy or can’t afford to buy one themselves. In either case, it often makes sense for another family member to buy a policy for their loved one.
What can I do to help me find the “best” life insurance policy?
There are several steps you can take to help ensure that you find the best life insurance policy for your needs:
- Determine how much coverage you need: Consider your financial situation and the needs of your loved ones, and determine how much coverage you need to provide financial protection for them in the event of your death.
- Research different types of policies: There are several types of life insurance policies, including term life insurance, whole life insurance, and universal life insurance. Each type of policy has its features and benefits, so it’s important to research and compare the options to determine which is best for you.
- Shop around: Get quotes from multiple insurance companies to compare prices and coverage options. Don’t just focus on the price – consider the financial strength and reputation of the insurance company.
- Please read the policy carefully: Make sure you understand its terms and conditions before buying it. Pay particular attention to exclusions and limitations, as these can affect your coverage.
- Work with a financial advisor or insurance agent: A financial advisor or insurance agent can help you understand your options and choose a policy that is right for you.
By following these steps, you can help ensure that you find the best life insurance policy for your needs.
