Why You Need Life Insurance
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Contact: Amanda Edmunds
I & E Insurance Agency
Life insurance is “insurance that pays out a sum of money either on the death of the insured person or after a set period.” Many people find that the concept is too complicated to even bother with despite it being a necessary part of personal finance. Life insurance policies are chosen based on your needs and goals, with several varieties to cover your unique desires.
Before you can pick your policy, it’s important to know exactly what you’re looking to do and knowing the reasons why you need life insurance is the first step!
The main purpose of life insurance is to provide financial security to your loved ones once you pass away. In the event that you die suddenly, life insurance can help keep your family on their feet, especially in the event that they rely solely on your income. Life insurance is a valuable method of income replacement as it ensures your family will still be able to make ends meet in the event that they lose your income. In many cases, income replacement makes up the largest portion of your life insurance policy. Many professions suggest a range of 5 to 10 times your annual salary so that ongoing living expenses will still be covered until your family can begin to put the pieces of their lives back together.
Pay Off Debts
In the event of death, your debts don’t just disappear. Life insurance is a surefire way to make sure that your family doesn’t get saddled with the responsibility of your repayment. Through a thorough life insurance policy, you can leave your family with enough to keep the collection agencies and creditors from coming after your estate and as such, leaving your heirs with the depleted remainder. This goes for mortgages, student loans, and any other lingering financial responsibilities.
Did you know that the average funeral costs between $7,000 and $9,000? This only includes burial, service fees, transporting to the funeral home, a casket, and embalming. Do you want to leave your family to cover the brunt of these costs on their own? While there are pre-payment options for funerals, it’s more beneficial to your family to take out a life insurance policy that can easily cover these out of pocket costs. These final expenses also include medical bills, which can easily run into the tens of thousands of dollars. A final expense policy can be helpful in these instances.
To Leave an Inheritance
While you might not have the direct funds to create an inheritance for your children or heirs, you can easily do so by buying a life insurance policy and naming them beneficiaries. Through this, you can create a strong financial future for them long after you’re gone. This money can be used to pay for your children’s future expenses like college or trade school, a surefire way to ensure they have the tools necessary to survive as adults.
Life insurance isn’t just for you and your family, but for your business as well. If you’re involved in a partnership with someone else, you should both have a policy. This will protect the living partner from the financial baggage of running a business on their own. Typically, small business owners engage in a buy-sell agreement. This is a legally binding contract that governs the situation in the event that someone dies or is forced to leave the business otherwise. This stipulates how a partner’s share of a business may be reassigned. Typically, it states that the available share is sold to the remaining partner.
Of course, once you’ve decided that you’d like to purchase a life insurance policy, it’s important to determine which type of plan fits best for you. There are many different types to choose from! Our agents at I & E Insurance Agency specialize in finding the perfect fit for you and your family!