Let’s discuss the benefits of purchasing life insurance in two “just imagine” scenarios.
You are the breadwinner of your family (man or woman, doesn’t matter). You are sitting on a fluffy cloud looking down at your living room. There are lots of tissues being handed out. Your kids are crying the most. You recognize, once again, how loved you were. You were the anchor that held the family together, especially on a financial level.
You did a great job raising respectful, well-behaved children. Your spouse loved you and you did the same. You certainly have some regrets in life, as we all do. But, there is one regret that will affect your family forever. You read about the benefits of life insurance. You knew the proceeds were tax-free. You were very healthy and the agent went over the benefits of life insurance with you on several occasions. The agent was nice and answered all your questions to your satisfaction. You promised Tom, the life insurance agent, that you would “get back to you shortly when I have some free time.”
Trouble is you never found the time. Now, as you sit on the cloud looking down at your loved ones, you know you messed up, big time.
Now that you have all the time in the world to sit on the cloud and think about the benefits of life insurance, you start to really get angry at yourself.
You realize how many ways tax-free life insurance provides for a family when the breadwinner passes away unexpectedly.
You think about the neighborhood your family will have to move into as the current mortgage is now too expensive. You think about all the friends your kids will lose on account of having to move to a less safe neighborhood. You realize your kids will lose their favorite sports coaches after your family moves. You recognize how hard your spouse will have to work, and not be with the kids, simply to maintain a much lower standard of living. You are shocked when you remember that college-fund you just started will never be funded. You are saddened when you think about your wonderful family annual vacations will now be just memories due to lack of money.
You sit on the cloud looking down at those you love and start to weep. This didn’t have to happen. I was smarter than this. I hurt the people that mean the most to me and for what? The cost of my phone bill?
Now, let’s imagine a different scenario from our friend sitting on the cloud.
With tears are streaming down my face, I watch as my family and friends share heartwarming stories about many of the good times we all shared. I certainly never planned to pass away this young, but, unfortunately, it happens way too often.
My tears subside as my lips form a slight smile. I think back to about two years ago when I received a phone call from a life insurance agent who discussed with me the many benefits of having life insurance.
The agent, Debra, asked me what I owed, my debts. I mentioned my mortgage, my car loans, my two credit cards. I also had re-financed my home two years ago. Debra asked me how my spouse would pay all these bills without my salary. It was an easy answer. The bills wouldn’t be paid.
Debra gave me a quote for a 30-year term life insurance policy. The monthly premium was reasonable and, due to my age, no medical exam was required. I was approved in one week.
Looking down from my cloud I smile. My family is going to be okay. My kids can stay in their current school, maintain their friendships and continue playing sports on their same teams. My spouse will not have to stress over bills and can live in our family home. I smile as tears stream down my face. All these good things are happening from me simply purchasing a life insurance policy.
The Key Benefits of Life Insurance for Individuals
A key reason to purchase life insurance is to provide immediate cash to help the survivors pay their monthly bills. This may include payment of the decedent’s final expenses and mortgage on the family home for the policyholder’s survivors.
Other advantages of 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> An insurance plan is an excellent tool for obtaining a college degree.
Those who may be hit with estate taxes upon death may also consider purchasing a life insurance policy for paying the amount due. Sadly, it is all too often that, an individual’s loved ones are left to come up with needed estate tax funds by selling assets for below market value.
Yet another advantage of life insurance is that the proceeds can be used to equal out an inheritance. For example, if you have two children and your goal is to leave your home to one child, it would make sense to purchase life insurance in the amount of the home’s value and name your other child as the beneficiary. This way, each of your children will receive an inheritance of relatively equal value.
Giving for Reasons That Matter
There are also many people who are involved with specific 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 directly to a cause that they care about.
Life insurance is an excellent and inexpensive way to help your favorite charity with tax-free proceeds.
Insuring Your Insurability
In addition to the various cash needs that life insurance proceeds may solve, there is yet another excellent reason that individuals purchase this type of coverage – and that is to insure their future insurability.
Specifically, if you are currently healthy, but various medical conditions run in your family history, then it is very smart to buy one now. It is strongly advised to purchase life insurance prior to having any health issues. First and foremost, your life insurance application will get approved and secondly, your premium will be much lower. Depending on your age and the amount of life insurance you are purchasing, a free medical exam may be required. The good news is there are many 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 is excellent for many business purposes. It is oftentimes offered as an employee benefit by employers. In this case, employees are required to name a beneficiary of their choice to receive the tax-free proceeds.
If you are a business owner, one recommended strategy is to use a plan in a buy / sell agreement. These agreements involve 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 surviving owner will receive the ownership shares and the deceased partner’s family will receive the life insurance proceeds in lieu of the stock position.
Key man life insurance is highly recommended to help the company survive the hardship of losing a key employee. The life insurance proceeds will be used by the company to help hire and train a new employee.
Many sole proprietors can also utilize the benefits of 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.
Often 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 policy can keep an income stream coming in for the sole proprietor’s loved ones, as well as for the decedent’s employees.
The Bottom Line For You and Your Loved Ones
As you can see, there are a lot of benefits of buying life insurance. In fact, we firmly believe it’s one of best important investments you’ll ever buy.
All of this is a lot of information. If you’re overwhelmed or you’re not sure where to go next, it’s simple.
If you are ready for your next step, please take a moment to use the quote form on our site to begin gathering your life insurance quotes today!