Why Get Life Insurance
People purchase life insurance so that they can provide financial help for their loved ones if they die prematurely.
Uses for Life Insurance
The number one use for life insurance is to help support your family and any other loved ones who rely on your income. Life insurance can also be used to pay any outstanding medical expenses or other debt you may have, and can also help with any funeral costs and estate administration expenses.
Life insurance financial proceeds typically are paid very quickly after a death certificate is issued and accepted by your insurance company. That’s much faster than proceeds from an estate that typically take several months before they’re approved by a probate court.
Some types of life insurance, like Whole Life or Universal Life, let you borrow against the “cash value” of your life insurance policy in some circumstances. This isn’t an option for the most common type of life insurance, Term Life.
What to Consider Before Buying Life Insurance
You need to think about how much life insurance you need, how long you need it for, and whether you have other benefits that can help your family if you pass away.
How much do your family members depend on your income and would they face any financial difficulties if something happened to you?
Do you have any debts or expenses that your family would have to pay if you passed away?
Did you factor in other life insurance plans that currently provide you with coverage, such as a policy you get from your employer or any US Veteran’s benefits?
Will your family members be eligible to receive Social Security or survivor’s benefits?
You’ll also need to think about what type of life insurance to get. Term Life covers you for a set period of time, and is usually timed to last until you expect to retire. Whole or Universal Life can both provide lifetime coverage and additional retirement or estate advantages, but typically at much greater cost.