Whether or not you decide to get covered, we can all admit that life insurance is important to those who are left behind. The good news is that with all the no exam life insurance options, it is easier than ever to get coverage in place.
Now, typically when someone reaches out to us here at IBUSA, it’s because they’ve already decided that they need to purchase a life insurance policy for themselves or a loved one and not because they’re trying to decide whether or not they actually need insurance in the first place.
This is why…
We don’t often find ourselves discussing why someone might need to purchase a life insurance policy or why owning a life insurance policy can be so important for so many people.
Most people contact us because they’ve already decided it’s important for them and now they’re just trying to figure out how they can find the best life insurance company for themselves.
That said however there are times when an individual will call us “undecided.”
They may be undecided because they aren’t sure if they need to purchase a life insurance policy, or it could be because someone else is urging them to get insured even though they’re not sure they need to!
This is why…
We wanted to take a moment and discuss some of the most common reasons why someone might need or want to purchase a life insurance policy on themselves (or a loved one) so that one can may gain a better understanding of why life insurance IS important.
Top 10 Reasons Why Life Insurance is Important
Although not a top 10 reason, most people have no idea how affordable coverage can be. So we believe it is important to point out that life insurance rates are very low, particularly if you are in relatively good health.
Alright, now on to our list.
#1. The proposed insured is the primary bread earner.
For those of you who are the primary bread earner for your family, we would like you to imagine for a moment what would happen to your family if you lost your job tomorrow and you weren’t able to find a new job for a month, or maybe six months.
Would your family…
Have enough “emergency funds” available to continue their daily routines?
Or would you and your family begin to make certain sacrifices until you found a new job and were able to replace the income you lost due to your unemployment?
With this in mind…
Take a moment and think about what would happen to your family if this “lost income” was never replaced?
Would they still be able to afford to live in their same home or neighborhood?
Would they still be able to attend the same schools and participate in all of the same after school activities?
Or would they (in addition to losing you) face a financial disaster with no end in sight?
#2. Mountain of debt.
Sometimes people will turn to life insurance to prevent their family from being burdened by a mountain of debt. These debts may be related to business loans or credit card debt, but more often, people are worried about how a mortgage would be paid off if the proposed insured died prematurely.
In cases like these…
The thought is that if an insurance policy could be used to pay off a mortgage, the surviving family members would be able to cope financially, thereby reducing the pain and suffering experienced by the insured’s death.
#3. Desire to take care of one’s children.
Probably one of the most common reasons why someone will choose to purchase a life insurance policy on themselves is to make sure that their dependent children will be taken care of in the event of their death.
This way, they are assured that their children will be able to keep their home that they are accustomed to and help provide for their children’s college education as well.
#4. Supplemental retirement.
Supplementing one’s retirement by purchasing a life insurance policy can be achieved in several ways.
is that it can maximize their pension disbursements while they are alive because then know that their loved ones will be financially taken care of by their life insurance policy when they die. This way, they can enjoy maximizing the money they receive while alive without worrying about what will be left when they die.
A second way…
A life insurance policy can supplement a retirement play by purchasing a whole life insurance policy and utilizing it to take advantage of some of the financial planning techniques often discussed in association with the Infinite Banking Concept.
The last way…
A life insurance policy can be used to supplement one’s retirement by shedding one’s perceived “obligations” of saving an inheritance for one’s family.
Immediately upon purchasing a life insurance policy, you have obtained a contract that provides a valuable financial asset (CASH) that you can leave behind to your loved beneficiaries. Which means that you will now be “freed up” to enjoy your savings and retirement funds guilt-free because you know that when you die, there will still be an inheritance left behind for your loved one.
This of course…
Assumes that you die while fully insured and that you don’t live TOO CAREFREE and spend all of your savings!
#5. It doesn’t always have to be about your loved ones.
Many individuals who aren’t sure if they need to purchase a life insurance policy on themselves fail to recognize that a life insurance policy doesn’t always have to ONLY benefit your loved ones.
Sometimes (when structured properly) a life insurance policy can contain a lot of benefits that can also help an insured while they are alive!
Benefits that can be…
Added to a traditional term or whole life insurance policy as a “rider” that are specifically designed to protect the living insured.
Living Benefit Riders such as a:
Disability income rider.
A disability income rider is an add-on available on some insurance policies that would allow the insured to receive a monthly payment if one becomes injured and isn’t able to work for a period of time (possibly permanent).
We should note…
Each insurance company will have their own way of making this “type” of determination, which will be something that you’ll want to research because some companies may have more “strict” or “rigid” definitions when making this determination. That said, however, the important takeaway here is that these benefits are available with some life insurance policies and do provide valuable protection for the “living insured”.
Terminal Illness rider.
Is an add-on that is available on some term or whole life insurance policies that allow an insured to access funds while they are still living under certain conditions. These conditions will vary but will usually require one to be diagnosed with some type of terminal illness in which the insured is not likely to live beyond the six to twelve months.
Critical iIlness rider.
A critical care rider would allow a living insured to collect a portion of their life insurance policy to pay for unexpected medical expenses that could arise due to a medical emergency in which one is expected to survive. Examples of such emergencies may include suffering from a heart attack or a stroke, being diagnosed with cancer, or suffering from some type of serious injury.
A Chronic illness rider.
Which would provide many of the same benefits as a critical care rider, only in this case, the qualifying event that would allow you to receive your benefit would be different in that this rider is designed only to “kick in” when someone is suffering from a “chronic” illness which is unlikely to be cured or cause one to die in the near future.
The caveat to this rider is that most insurance companies (if not all) will require that those who qualify for this benefit will be unable to perform two out of six daily living activities. ADL’s includes eating, bathing, dressing, toileting, walking, and continence.
There are also a variety of different financial strategies that one can employ with certain types of life insurance policies that can also be quite beneficial to the Living Insured.
#6. Protect a business.
Sometimes people choose to purchase a life insurance policy so that they can protect their business. Now this protection can take many forms.
Sometimes the insurance policy can be used to finance a buy/sell agreement between two partners.
While other times it can be used to insure a “key man” or provide collateral for a loan.
Having a life insurance policy in place can also just provide “liquid capital” to your loved one’s so that if you do die, they will have cash on hand to take care of any unexpected costs to the business that they might not be prepared for.
This way, they can avoid any short-term losses or the need to hold a “fire sale” just so that they can recover from their immediate loss.
#7. The judge says you have to (protect alimony or child support payments).
Unfortunately, for many people, the need to purchase a life insurance policy comes as a direct result of a court order (divorce decree), which means that now they are going to be forced (by the judge) to purchase a life insurance policy on themselves so that they can fulfill a court settlement.
The problem that…
Many folks in this situation may encounter that sometimes people can’t qualify for a traditional term or whole life insurance policy, which makes this request impossible to comply with.
As one can imagine, it can make reaching a settlement much more difficult and potentially more costly!
The good news is that it may be possible for those who already have a policy in place to make changes to that existing policy that could satisfy all parties involved.
#8. Funerals are expensive.
We’ll be the first to admit that not everyone needs to purchase a life insurance policy. There will be some who can “self-insure” or don’t have anyone depending on them financially to justify buying a traditional term or whole life insurance policy.
However, one should still consider purchasing a final expense insurance policy so that whoever will be responsible for their burial isn’t burdened with any financial hardship.
While dying is technically free, getting buried or cremated isn’t. So unless your estate has about $3,000 to $10,000 (burial vs. cremation) in liquid assets to pay for your end of life services, you may want to consider purchasing a small burial life insurance policy.
#9. Peace of mind.
Often, it’s just important to have a life insurance policy “just in case” it’s needed.
Sure, your family may not “technically” need one, but who knows what the future may hold.
Five years from now, you may not be in the same financial position you’re in right now.
Now we’re not saying this to scare you. After all, your new “position” could be a good one. It could be because you:
- Had a child,
- Bought a home or bought a bigger one,
- Expanded your business,
- Bought some investment real estate,
The point is, while it may be true that you may not necessarily need a life insurance policy (or extra life insurance coverage) now, you might in the future and who’s to say whether or not you’ll be able to qualify for that coverage when you do or just how more expensive it will be because you’re now older!
#10. Sometimes the life insurance coverage you’re looking for isn’t all that expensive.
If we were to tell you right now you could have $1 million life insurance for your family for free, would you take it?
Of course you would, because we all understand that there is value in having the protection that life insurance can provide.
So, based on this line of thinking, we don’t have to argue whether or not someone should have a life insurance policy, what we should be discussing is whether the COST of the life insurance is worth it to you personally!
Which is why…
Unless you know exactly what it would cost you to purchase a life insurance policy for you and your family, choosing not to get insured is a bit silly because you never know.
You could be deciding not to ensure your family’s financial future for less money than it costs to take your family to a movie once or twice a month.
And if that’s the case, then you may end up deciding that today is the day you get insured!
And there you have it…
Our top 10 reasons why life insurance may be important to you. Hopefully, this list will help you better understand whether or not you’ll need to purchase a life insurance policy.