Perhaps you have heard some rumors about how unnecessary life insurance is. You may have heard that you can get by on your savings or that you can simply rely on Social Security.
The truth is that while these options can help, they are not a substitute for life insurance. Here are a few of the reasons why you need life insurance.
The Cost of a Funeral
If you are under the age of 55, life insurance is probably the cheapest way to cover funeral costs. A burial can cost a lot, and there are some people who will not be able to afford to pay for this expense. If you leave behind a family, school-aged children, or other dependents, they will need to use life insurance to cover the cost of your funeral.
On top of funeral costs, there are also the legal fees, the cost of the cemetery plot, and the cost of administration. If you don’t have life insurance, your family will have to have to pay for these expenses out of pocket.
Providing for Those Who Are Left Behind
If you were married, you can think of life insurance as a joint investment. It is a way to pool your money with your spouse, and it can provide for your spouse in the event of your death. When you die, your spouse will receive the proceeds from your life insurance policy. If your spouse dies before you do, then you will receive the proceeds of their life insurance policy.
If you are single, then life insurance can provide for your children, grandchildren, or other dependents. These people will have a financial incentive to look after you if you have a life insurance policy that will pay them a lump sum, or a monthly stipend, in the event of your death.
Covering Your Debts
You may have a mortgage, a car loan, or a student loan. In the event of your death, your life insurance policy will cover the remaining debt on your car, your home, or your college tuition.
A life insurance policy can also cover the cost of your funeral expenses. In addition, a term life insurance policy can provide a lump sum payment that will help your family pay off any remaining debts that you had.