When constructing an overall financial plan for you and your family, a few things come to mind: building retirement savings, saving for children’s college education and purchasing insurance coverage for health, car and home. However, an important element to include in your financial plan is life insurance coverage. Listed below are some reasons why life insurance is as important as health and car insurance.
To begin with, the reason why health, home, and car insurance are all important to have is because they provide a financial safety net in the event you (or a family member) gets seriously ill, is in a significant car accident or has a fire or flood in the home. You have peace of mind knowing that you will have money available to get you and your family back to the place they were before the tragic event happened. This is the same reason why you need life insurance – if your family faces the tragic circumstance of your early passing, they will have the funds available to continue life as it was before you died. Life insurance ensures that your family’s grief from your early death will not be compounded by financial obligations they cannot meet because of the loss of income.
Other reasons to keep in mind:
- If you have children, a life insurance payout can ensure that they will have the money to attend college as planned.
- If you care for an aging parent who depends on you for their living situation, a life insurance policy ensures that in the event of your early death, your parent will have the financial means to continue living as they did before your passing.
- Just as in the case of an auto accident when monies are paid out for related items like a rental car or other necessary expenses, a life insurance payout gives your family the money they need to pay for all funeral costs associated with your passing such as the hearse, minister, printed items, etc.
- If you have a large estate and/or have a heavy debt burden, a life insurance policy can make sure your family will have the money available to pay off any estate taxes or debt left behind.