Many people view life insurance as a luxury or something they can put off purchasing until they’re older. However, losing a loved one can place a significant financial burden on surviving family members that they may struggle to overcome.
Investing in life insurance coverage is essential when you’re experiencing or anticipating any of these situations. When you have a life insurance policy to protect yourself and your family, you can enjoy peace of mind that your loved ones’ financial future is secure.
Buying a Home With a Mortgage
Buying a house is usually the largest purchase many people make in their lifetime. If you die, life insurance covers the amount of a mortgage, allowing your spouse or beneficiary to retain the home rather than selling to pay back the lender.
Besides purchasing a home, marriage means sharing all expenses and liabilities. Both parties contribute to fulfilling obligations, and the loss of one member of a household can leave the spouse unprepared to deal with their financial responsibilities. These obligations include taxes owed, business liabilities, or a child’s college tuition.
Even if you don’t plan on having children, life insurance is a means for building long-term wealth while protecting a spouse who has limited earning potential.
The cost of raising a child born in 2022 to the age of 18 is estimated at $272,049. From daycare and everyday living expenses to a child’s higher education, a financial plan is vital to ensure a viable future for your children.
Supporting Your Aging Parents
Aging parents can require a safety net to supplement retirement income, which may not be enough to cover their care. Life insurance can help you pay for a parent’s funeral after their passing. Furthermore, death benefits paid to the surviving parent, often as a lump sum, can relieve you of your financial obligation to support them.
Starting a Business
Starting a small business requires capital and often calls for prospective entrepreneurs to go into debt. Having a life insurance plan covering the business’ liabilities, including outstanding loan payments, can keep your family from financial ruin if you die.
Besides your family members, a business partner can also benefit from your life insurance policy to keep the business afloat. The practice of business partners purchasing life insurance policies on each other is a commitment that ensures business debt is paid and the company continues to fulfill its obligations.
Becoming a Stay-At-Home Parent
A stay-at-home parent takes on the burden of raising children while the spouse holds a job or runs a business. If the stay-at-home parent dies, the surviving parent may have to take on responsibilities beyond their financial capacity.
These responsibilities include paying for help around the home and childcare services. Having a life insurance policy for the partner who remains at home with the children is just as critical as having a life insurance policy for the spouse earning the family income.
Dealing With Private Student Loans
If you are carrying private student loans with a cosigner, buying life insurance is critical for your family. Although parents aren’t usually required to pay back federal student loans if the borrower dies, this isn’t always true for private loans.
In some cases of student debt, when the primary borrower dies, private lenders can require loan cosigners to pay back the balance owed. To avoid leaving your family in the unpleasant circumstance of paying your loan, investing in life insurance is a good idea.
For life insurance used to cover your debts, you may be able to save money by purchasing a term life insurance policy rather than whole life insurance. Term life insurance has a fixed duration that can align with your loan’s lifespan, making it a more affordable option.
Plan for the Future
Estate planning is the responsibility of anyone looking to guarantee the future of their loved ones. Whether your goal is to provide your spouse with an emergency fund in the case of your passing or to ensure your legacy through the long-term success of your business, buying life insurance is essential.
Seek quotes from various life insurance companies to get the best rates and coverage for your situation. Buying life insurance is an important step whether you’re graduating from school, buying a house, or planning for retirement.
Disclaimer: All content on this site is information of a general nature and does not address the circumstances of any particular entity or individual, nor is the information a substitute for professional financial advice and services.