Why Buy Life Insurance?

Why buy life insurance? Many financial advisors and insurance experts consider life insurance a key part of a sound financial plan for all individuals and families.

Buying life insurance can serve an important role in providing financial security and protection for your family in the following situations:

1. To replace income for your dependents
If others are dependent on your income for support, life insurance can replace your income for them if you should die prematurely. One example is parents with young children. Also, couples where one spouse relies on the income of the other spouse for financial support. And, adults, parents, grandparents, children or grandchildren who may rely on you financially. In addition, your financial support for your spouse through life insurance can aid your spouse should government-sponsored benefits be reduced after your death.

2. To create an inheritance for your heirs
Whether you have other assets or not, you can create an inheritance for your heirs by purchasing a life insurance policy and naming your heirs as beneficiaries.

3. To pay for your burial and final expenses
The benefits provided by a life insurance policy can be used for many purposes, including to pay your burial and funeral costs. Also, you can use the proceeds for any other purpose including probate and estate costs, and debt. Life insurance can pay for medical bills not covered by health insurance.

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4. To pay federal and state estate taxes
Benefits from a life insurance policy can be used to pay your estate taxes so your heirs won’t have to sell other assets to pay those taxes. Although tax law changes may lessen estate taxes on a federal level in the near future, states may act to increase estate taxes offsetting the federal tax decreases.

5. To make contributions to charities
You can choose to make a charity the beneficiary of your life insurance policy. This would allow you to make a larger contribution than if you chose to donate the cash equivalent of the premiums you paid for your life insurance policy.

6. To create a type of savings plan
Some types of life insurance, such as whole life insurance, can create a cash value within the life insurance policy. The cash value may be borrowed or withdrawn by the policyholder. Many consider this type of policy a forced-savings plan since most individuals consider paying their life insurance premium as a high priority. The interest that accumulates in the policy grows tax-deferred. The money is also tax-exempt if paid out as a death claim.

Can you buy life insurance and if so, learn how.

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