While most people don’t like the idea of discussing the benefits of life insurance, there is certainly an important place for it in one’s overall financial planning. In fact, without the protection of life insurance coverage, loved ones may need to drastically alter their lifestyle if the unexpected should occur.
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In addition to being used for providing income and funds for a policy holder’s dependents, life insurance policies are also used by both individuals and businesses for a variety of other needs as well. And, over time, life insurance has come to be used as a primary component of overall financial, estate, and business planning purposes.
In fact, life insurance is one of the most important purchases that you can ever make for your family. Without the proper life insurance plan, your family members could be left with a massive amount of debt, which can make an already difficult situation a thousand times worse. There are dozens of benefits to having a life insurance plan that you should consider.
There are millions of people without life insurance coverage, which could be one of the worst mistakes that you could make. It’s important that you understand all of the benefits of having a life insurance plan.
The Long List of Life Insurance Benefits for Individuals
Although life insurance is often used for providing needed funds to surviving family members in the event of a breadwinner’s death, it is also used as a means for paying off debt. This may include payment of the decedent’s final expenses such as funeral costs and any unpaid medical bills, as well as paying down the mortgage on the family home for the policy holder’s survivors.
Other advantages for life insurance proceeds can include the funding of future education expenses for the insured’s children or grandchildren. With the high – and rising – cost of college tuition, life insurance can help a policy holder to keep his or her promise to loved ones for obtaining a college degree.
Those who may be hit with estate taxes upon death may also consider purchasing a life insurance policy for the purpose of paying the amount due. Oftentimes, an individual’s loved ones are left to come up with needed estate tax funds by selling assets for below market value. Having readily available cash through a life insurance policy can rectify this situation, leaving family heirlooms and other important assets in-tact.
Yet another advantage of life insurance is that the proceeds can be used to equal out an inheritance. For example, if an individual has two children and he wishes to leave his home to one child, he could purchase a life insurance policy in the amount of the home’s value and name his other child as the beneficiary of the policy. This way, each child will receive an inheritance of relatively equal value.
Giving for Reasons That Matter
There are also many people who are involved with certain charities that are close to their hearts. By purchasing a life insurance policy with the name of a charity as the beneficiary, individuals can provide tax free proceeds to a cause that they care about.
While life insurance isn’t usually used as to help charities, but it’s a great way to give back to any non-profits or causes that are close to your heart.
Insuring Your Insurability
In addition to the various cash needs that life insurance proceeds can solve, there is yet another reason that individuals purchase this type of coverage – and that is to insure their future insurability.
For example, if a person is currently healthy, but various medical conditions run in their family history, then the individual may purchase a life insurance policy so that it is already in place prior to the possibility of contracting adverse health that may render him or her uninsurable in the future. Most life insurance policies require the applicant to undergo a medical exam, though there are options that can be looked into that are life insurance policies that do not require a physical exam, though these will come with a higher premium.
Business Uses for Life Insurance
Life insurance also has many business purposes. It is oftentimes offered as an employee benefit by employers. In this case, employees are able to name a beneficiary of their choice to receive the proceeds.
For those who are business owners, life insurance can play a primary role in the continuation of their company. One strategy is to use life insurance to fund a buy / sell agreement. These agreements entail the partners or owners of a company purchasing life insurance on each others’ lives. In the event that one of the owners or partners die, the other owners – who are the named beneficiaries of the policy – can use the proceeds to keep the business running, or alternatively, to find, hire, and train a replacement.
Many sole proprietors can also use life insurance. Here, the policy may be utilized as a business continuation plan. This way, if the sole business owner were to pass away, the life insurance proceeds could be used to keep the business afloat until the business is sold or a replacement is found.
In a number of cases, the loss of a sole proprietor can mean instant business closure – and subsequently, the loss of income for the dependents of the business owner. Therefore, a life insurance policy can help to keep an income stream coming in for the sole proprietor’s loved ones, as well as for the decedent’s employees.
Getting Affordable Life Insurance Coverage
While many people understand the benefits of having a life insurance plan, there are still millions of people without the proper protection that they need. One of the most common reasons that people don’t buy a life insurance plan is because they assume that a policy is going to be too expensive, but in most cases, that couldn’t be further from the truth. There are plenty of affordable options to give your family the protection that they need. If you want to get the lowest rates available, there are several changes that you can make.
Before the insurance company approves your application for coverage, they are going to require that you take a medical exam, and the results from the exam are going to play a huge role in how much you pay for your insurance coverage. If you want to get lower premiums, you’ll need to improve your health.
The first things that you should do is start a healthy diet and start a regular exercise program. Both of these can help you shed those extra pounds, lower your cholesterol, lower your blood pressure, and much more. All of these are going to help you secure lower insurance rates.
The next way that you can lower your insurance rates is to eliminate any tobacco that you currently use. If you’re listed as a smoker on your life insurance application, you can expect to pay much lift month premiums than a non-smoker. In fact, smokers are going to pay twice as much for their life insurance coverage versus what a non-smoker is going to pay for the same amount of policy. If you want to save money on your insurance coverage, you’ll need to kick those bad habits once and for all.
The best way to ensure that you’re getting the lowest insurance premiums is to work with an independent insurance agent. Unlike a traditional insurance agent, independent agent works with dozens of highly rated companies across the nation. Instead of having to call all of those companies yourself, our agents can bring all of the lowest insurance rates directly to you.
Every insurance company is different, which means all of them are going to give you drastically different quotes depending on which company that you choose. If you have any health complications or any pre-existing conditions, you’ll need to find a company that’s going to give you the best rates for pre-existing condition life insurance.
The Bottom Line
There are numerous uses for life insurance proceeds. This product that once only provided a basic death benefit in return for a regular premium, has today become a key component of financial, estate, and business continuation planning. Therefore, life insurance should be considered in a number of situations.
If you have any questions about getting affordable life insurance or want to discuss the different types of life insurance available, please contact one of our agents today and we would be happy to answer those questions for you and ensure that you’re getting the best coverage to meet your needs.
Not having a quality life insurance policy is one of the worst mistakes that you can make for your loved ones. Even if you are needing life insurance quotes over the age of 50, we can help you today. Don’t leave your loved ones with a massive amount of debt and no way to pay off all of those bills. You never know what’s going to happen to you tomorrow, which means that you shouldn’t wait any longer to get the life insurance protection that your family deserves.