Life insurance is designed to provide benefits for loved ones in the event of the death of the policy holder. Young people tend to put off life insurance, even though it is cost-effective for individuals under the age of 35. As we age, the life insurance costs start to increase due to increased health risks and other considerations. It is important to assess your life situation, your family, and to make the best decision for everyone to ensure there will be benefits for them, and they are not saddled with debts and expensive funeral costs. There are some important things you do need to know about life insurance benefits including:
- Parents can purchase life insurance for their children
- Affordable life insurance rates start under the age of 35
- Most insurance companies will offer discounts on life insurance if you bundle your auto and home insurance policies
Life insurance is part of having a solid financial plan. There are numerous benefits to purchasing a life insurance policy, and ensuring your loved ones are properly cared for in the event of your death. Protecting your family and loved ones should be one of your top priorities. If your spouse, children, and other loved ones rely on you for financial support, life insurance is a necessity. The life insurance will replace your income for them when you die. In addition to having a policy that will cover the costs of the income loss, consider adding more funds to ensure your children can maintain the standard of living you have established for them. In some instances, this may require more funds to help pay for childcare and other things.
Not only will life insurance provide for your dependents, it could also be used to leave an inheritance for your heirs. Many people establish life insurance policies that will help to set up their children for a solid financial future in the event of their passing.
If you own a business, you must also consider how your death could impact the business. Business partners need to have conversations about what could happen if one of the partners passes away. Buying a business partner’s shares could cost a lot of money that you do not have access to use in order to buy a business partner’s shares. If a partner dies, life insurance can provide the money needed to buy their interest from their heirs, preventing the need to sell the company.
Life insurance policies are often used to pay off debts that may be in your name such as credit cards, mortgages, and car loans. Funeral and burial costs can start upwards of $10K in many situations, making it challenging for some families to have money to pay for the burial expenses.
There are multiple types of life insurance including:
- Term life insurance
- Permanent life insurance
- Whole life insurance
- Universal life insurance
- Variable life insurance
- Simplified life insurance
- Guaranteed life insurance
Term and whole life insurance are the most commonly used life insurance policies. Term life insurance will last for a set number of years and will expire if you do not pass away within the time frame of the policy. Whole life insurance is set up as a permanent life insurance which includes universal life, allowing you to build “cash value” over time. When you accumulate a cash value, you can take a loan against your life insurance policy that can be used to pay for large expenses.
Contact our Kaysville insurance office to discuss life insurance, and what options are available.