For those fortunate enough to have good health, buying a life insurance policy might not seem like a priority. After all, planning for our inevitable demise isn’t something most people look forward to.
However, life insurance can give you peace of mind knowing that your loved ones are financially taken care of when you’re gone. The sooner you begin investing in a life insurance policy, the more financial help you will be able to leave your family.
If you’re interested in learning why it’s a good idea to buy life insurance now, then read on to find out.
What is Life Insurance?
Before getting into why you should buy life insurance, let’s take a look at what exactly life insurance is. Simply put, life insurance is an insurance policy that allows you—the insured—to pay a premium—to an insurer—in order for a designated beneficiary to receive a sum of money upon your death. The premium paid is the monthly or annual payments that keep the policy in effect.
Why Buy Life Insurance
There are few people who wouldn’t benefit from buying life insurance. Unless you’re already wealthy or have no immediate family, basic life insurance will help cover things like funeral costs and any unpaid medical bills. The average funeral costs in the United States is $7,000 to $12,000. Medical bills on the other hand often times add up to much more.
Income for Your Family
If your family relies heavily on your income to survive, then your unexpected death could leave them in financial hardship. Funeral and medical bills aren’t the only things your family would be left to pay for. Bills from mortgages, taxes, car payments, etc. are also things a good life insurance policy can help cover.
You Earn Interest and Dividends
Although life insurance policies are not investments per se, the cash value of your policy grows similar to other financial investments. Insurance companies use your money to invest and guarantee you’ll earn a set amount of interest. Some companies also profit share with their policyholders and payout dividends.
Cash Value Loan Option
In a straight life insurance policy, a policy loan feature allows you to borrow money on the cash value of your policy. The great thing about a policy loan is that you don’t need credit approval like you would a bank loan. Not only that but you also still gain interest on the full cash value of your policy.
Is Life Insurance Right for You?
Most people take out a life insurance policy because they like knowing their family and loved ones will be financially taken care of when they’re gone. Also, policyholders earn a steady interest and sometimes dividends, allowing the cash value of the policy to grow faster.
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