As I grew older, got married, started a family, and began a business, I realized that life insurance was indispensable and fundamental to a sound financial plan. Over the years, life insurance has given me peace of mind knowing that money would be available to protect my family and estate in a number of ways.
Here are 6 reasons why I have life insurance:
1. To Pay Final Expenses
The cost of a funeral and burial can easily run into the tens of thousands of dollars, and I don’t want my wife, parents, or children to suffer financially in addition to emotionally at my death.
2. To Cover Children’s Expenses
Like most fathers, I want to be sure my kids are well taken care of and can afford a quality college education. For this reason, additional coverage is absolutely essential while my kids are still at home.
3. Protection of my Assets
The very purpose of my life insurance policy is to protect my assets and my family in case I pass away. I know that many estate taxes can be avoided and that the death benefits can secure the quality of life that my family has become accustomed to, ultimately assuring me that I don't have to worry about what might happen should I become not long for this earth.
4. To Pay Off Estate Taxes
Estate taxes can be steep, so having insurance in place to pay them is essential to avoid jeopardizing assets or funds built for retirement. Use of insurance for this purpose is most common in large estates, and uses permanent (rather than term) insurance to ensure that coverage remains until the end of life.
5. To Buy a Business Partner’s Shares
Since I’m involved in a business partnership, I need insurance on my partner’s life. The reason is so if he dies, I will have enough cash to buy his interest from his heirs and pay his share of the company’s obligations without having to sell the company itself. He has the same needs (due to the risk that I might die), and he simultaneously purchased insurance on my life.
6. Numerous Future Options
Once I have paid in enough to this policy, I know that accessing these funds comes with an array of options. For instance, I can convert it into an annuity and use some of the cash while also keeping a portion of the death benefits intact. Or, I can just keep paying into it and let it pay out after I have passed away as a way of me leaving a legacy and an inheritance behind for my family.
If you have another idea for savings or experiences of investing tips, connect to Money Lover to help a wiser expense manage world!