{"id":402990,"date":"2024-12-03T08:31:22","date_gmt":"2024-12-03T08:31:22","guid":{"rendered":"https:\/\/fidelitylife.staging.thisismess.io\/life-insurance-basics\/uncategorized\/why-is-life-insurance-important\/"},"modified":"2024-12-03T08:31:22","modified_gmt":"2024-12-03T08:31:22","slug":"why-is-life-insurance-important","status":"publish","type":"post","link":"https:\/\/staging03.wordpress.fidelitylife.com\/?p=402990","title":{"rendered":"Why Is Life Insurance So Important?"},"content":{"rendered":"
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Have you been considering purchasing a life insurance policy? Maybe your partner, parent, or even your child has been pushing the importance of life insurance and encouraging you to invest in the peace of mind that only life insurance can provide.<\/p>\n

Sure, you\u2019ve thought about it, but you\u2019re still not quite sure why life insurance is so important.<\/p>\n

If you\u2019re pondering the question, \u201cWhy do I need life insurance?\u201d just think about those who depend on you. Where would your spouse and your children be financially if your time on earth suddenly came to an end? Would they be able to make ends meet?<\/p>\n

There are also misconceptions about life insurance that may be the reason you haven\u2019t purchased a policy quite yet. Maybe you\u2019ve heard that coverage is expensive, you think your employer provides all the insurance you need, or it\u2019s too late for you to get a meaningful policy.<\/p>\n

The fact is that these myths often lead people away from an important financial tool that could offer benefits that just about everyone needs. In fact, according to LIMRA <\/a> , a non-profit organization, only about 52% of adults have some form of life insurance. Chances are that misconceptions are the reason that the other 48% remain uninsured. Read on to answer the question, \u201cWhy is life insurance so important?\u201d<\/p>\n

Understanding Life Insurance: Basics and Purpose<\/h2>\n

By definition, life insurance is, \u201cinsurance that pays out a sum of money either on the death of the insured person or after a set period.\u201d But that definition is rather bland and doesn\u2019t imply the real benefits of this type of insurance.<\/p>\n

Ultimately, coverage is about much more than a death benefit. It\u2019s about ensuring that your family is financially secure even if you\u2019re not there to provide that security. When you filled out your tax documents, how many dependents did you include?<\/p>\n

Those dependents are there because they depend on you.<\/p>\n

Your spouse and your children will likely have a hard time making ends meet without your income. Moreover, you have to consider other areas where you add value outside of your paycheck. For example, will your spouse be able to take on the added expense of daycare if you\u2019re not there to keep an eye on your children?<\/p>\n

You should consider factors like these as you buy life insurance. Ultimately, your life insurance isn\u2019t for you; it\u2019s for your beneficiaries. Consider the financial voids that will be created when you die and the coverage amount you need to fill those voids.<\/p>\n

Key Reasons to Buy Life Insurance<\/h2>\n

Have you been asking yourself the question, \u201cWhy do I need life insurance?\u201d If so, there are several valid reasons to purchase a policy. Continue reading to find out why it\u2019s important to buy life insurance.<\/p>\n

Easing Financial Stress for Loved Ones<\/h3>\n

You go to work every day to support your family. Unfortunately, there\u2019s a strong chance that those who depend on you would feel financial strain relatively quickly if you were to die. But they don\u2019t have to.<\/p>\n

This is one of the biggest reasons life insurance is important.<\/p>\n

Life insurance is designed to provide your loved ones with financial support after your death \u2013 support that can act as an income replacement should it be needed.<\/p>\n

When you purchase life insurance, you choose a coverage amount. That coverage amount typically varies from a few thousand dollars to a couple million dollars. If you die while your policy is active, your beneficiaries receive a check for your death benefit, replacing the income you would have otherwise brought into your household.<\/p>\n

Covering Daily Expenses and Bills<\/h3>\n

The vast majority of people who purchase life insurance do so as a means of income replacement when they die. The simple fact is that your family faces many day-to-day expenses. Everything from food to clothing, school supplies, and gasoline comes with a cost.<\/p>\n

When you pass away, your family will lose your paycheck. Sure, they may be able to look forward to pensions, social security, or other benefits, but those benefits may take some time to kick in, leaving your loved ones to struggle financially until they do. When these benefits kick in, they may not be enough to maintain your loved ones\u2019 current lifestyle.<\/p>\n

Life insurance is important because it offers rapid access to funds for your family in the event of your death. Moreover, you can adjust your coverage to ensure it meets all of their financial needs.<\/p>\n

Protecting Family Home and Settling Debts<\/h3>\n

Life insurance is also an option for protecting your family home and your estate. When you pass, lenders will look to your estate to settle any outstanding debts you might have. If you\u2019re unable to pay those debts through your estate, any co-signers will have to pay them for you.<\/p>\n

Moreover, say you die with $50,000 in debt and only $30,000 in liquid assets. In this case, your heirs may be forced to sell your family home to cover the difference.<\/p>\n

In a worst-case scenario, if you still have a mortgage on your home, it could go into foreclosure if you don\u2019t have life insurance to cover it. Help your loved ones avoid this hardship by purchasing life insurance to cover any outstanding debts you might have.<\/p>\n

Funding Education for Children<\/h3>\n

As a parent, you want to make sure your children have a leg up in this world, including access to the best education. Unfortunately, education costs are soaring. If you\u2019re not there to help, your children may not be able to affordably access a college education.<\/p>\n

This is yet another reason life insurance is important.<\/p>\n

Simply get accurate estimates for how much money it will cost to send your children to college. Then, make sure to bake that cost in when you\u2019re considering your life insurance coverage amount to help secure your children\u2019s successful futures.<\/p>\n

Safeguarding Small Businesses<\/h3>\n

If you\u2019re a business owner, you\u2019ve likely worked extremely hard to build a brand that will stand the test of time. Unfortunately, if you\u2019re not there to operate your company, it may take on increased expenses, making it difficult for your company to stay afloat.<\/p>\n

Your life insurance death benefit can help with that too.<\/p>\n

Your heirs can use the death benefit of your life insurance policy to hire experts in your industry and keep your business alive long after you\u2019ve passed. Not only can this give your loved ones a source of income, but it could also keep your legacy alive for years to come.<\/p>\n

Ensuring a Secure Retirement<\/h3>\n

Life insurance isn\u2019t only valuable, because of its death benefit. Your life insurance policy can help you throughout your retirement. That\u2019s because some life insurance policies build value as you pay into them.<\/p>\n

When you retire, if you find yourself in need of a large influx of cash, you could tap into the cash value of your policy either with a loan or by surrendering your policy. Moreover, you can add riders to your policy to help you maintain coverage in the event of unexpected situations.<\/p>\n

For example, you can use the waiver of premium rider to cover the cost of your insurance should a qualifying event mean you\u2019re no longer able to. You could also use the guaranteed insurability rider to ensure you have access to insurance after your term no matter your age or health condition.<\/p>\n

Providing Cash During Lifetime<\/h3>\n

As mentioned above, life insurance can help you access cash you may need during your lifetime. That is, as long as you have whole life insurance. Policies like whole and permanent life insurance build cash value every time you make a premium payment.<\/p>\n

This often comes in handy when unexpected expenses rear their ugly heads during your retirement years.<\/p>\n

For example, say you\u2019ve retired and you\u2019re on a fixed income, but your home\u2019s roof is aging. When it\u2019s time for a new roof, you can access the cash value in your insurance policy to cover that expense. The same goes for any other surprise expense you may need a significant influx of cash to cover.<\/p>\n

Covering End-of-Life Expenses<\/h3>\n

Final expense insurance <\/a> is also an important part of life insurance. The reality is that everyone incurs expenses as they near death and following death. Hospice care through the final month of life costs tens of thousands of dollars on average. Moreover, the average funeral costs <\/a> $6,971 without a viewing and $7,848 if a viewing is involved.<\/p>\n

The simple fact is that if you don\u2019t plan for these expenses before you die, those you love will likely have to foot the bill in one of two ways:<\/p>\n