Life Insurance

Life insurance isn’t fun to talk about, it’s not something most people even want to think about. Even worse than talking about or thinking about life insurance is being “sold” life insurance. Then after deciding to buy life insurance is the dreaded process that you have to go through to get the policy. However, like death and taxes some things become inevitable as we grow older and become adults. As we grow older and take on new relationships and greater responsibilities life insurance also becomes inevitable for responsible adults.

So most people become aware that they need life insurance, but even when responsible adults know they need life insurance many still procrastinate and put off making the decision until an important event happens to push them to actually pull the trigger. It might be a news event, death of a loved one or a close friend. There are obvious benefits to buying life insurance before that “ah ha moment” especially if you have debt, are married, have or are planning on starting a family, or if you are a business owner.

Why Do You Need Life Insurance? The question that you need to ask yourself is “will anyone be adversely affected financially if I should die unexpectedly?” Of course family and friends will be sad but will they be financially affected if you should die? This is it – this is the answer that you need to know if you are being “sold” life insurance or you are “buying” life insurance. Often time insurance agents want you to buy life insurance but if you ask yourself the question above you’ll know if you really need it or not. On the flip side to ignore the fact that you need life insurance is irresponsible and if the unexpected does happen can leave those who count on you devastated.

There Are Three Basic Reasons To Buy Life Insurance:

  • Pay off debt: If you have debt it does not go away if you die. Banks will loan you money because they thin you will pay them back. If you own a home, a business, or have other personal liabilities like a car loan or credit card debt, someone will become liable for those debts if you die. Most often the person responsible for the debts is the person’s spouse but in the absence of a spouse the bank can put a lien on an estate. Whether it’s your family or your business life is easier without too much debt.
  • Replace Income: Most couples rely on both incomes to meet a modern budget, pay bills, and save for the future. If there is a family with children, the need for continued income become even more obvious. Every family has hopes, dreams, and goals for the future and those goals are family goals so they don’t have to die when one of the parents die unexpectedly. Tomorrow will come and having a monthly income for 10, 20, or 30 years will help to put the family’s mind at ease and allow them to get used to their new life.
  • A Combination Of Both: Paying off debt and providing an income for your family is usually the best choice to care for loved ones. Most families would love to have their home paid off, no car payments, and eliminated credit card debt. If a couple without children wants to just have enough life insurance to pay off the debt that they accrued together then getting a policy to pay off debt might be enough. If a business has an operating loan or a capital loan it will be a stronger business without that debt so often businesses will have an insurance policy on the owner or “key person.” However, in the unfortunate event of an untimely death the day after the debt is paid off the bills do not stop, the kids still need school supplies, the insurance still needs to be paid and maybe even the car replaced. So how much is needed? Well this is where a professional insurance agent or financial planner can be of benefit. Most insurance agents will have access to software to help you figure out how much you need and most financial planners can help with advanced life insurance planning for you and your family.

Where Should You Buy Life Insurance? The life insurance industry is an “interesting” industry. A life insurance agent is selling you something that you will never see the benefit of but can give you peace of mind knowing that you are providing for the ones that you love or making sure that your life’s work in your business will continue long after you leave this earth. Like all industries companies vary widely, some good, some not as good, and some you need to steer clear of. The best place to start is by consulting an experienced financial planner, someone with years of experience, industry designations, and someone who will put your needs above their own. The ones to steer clear of are the ones that only represent one company, the life insurance industry is so diverse that you should work with a planner or an agent that can compare multiple companies based on your health, policy needed, and amount needed. I recommend that you stay away from internet companies and consult a financial planner or an agent for help, you won’t save money by doing it yourself and a life insurance mistake could cost you and more importantly your family.

What Else Should You Know? Life insurance is a big purchase, it’s not too complicated but a mistake could hurt those that you love at a time when there is already pain. When you do need life insurance or additional insurance consult a professional who puts your best interests first, have them review what you already have and come up with a plan moving forward. Things in life change and so does your life insurance needs. If you have group life insurance you have a great start and a good planner or agent will take this into consideration when making a plan for you but know that group life insurance is rarely enough or the right kind of insurance for you and your family.

Like many financial planning decisions life insurance can seem complicated and overwhelming but with the help of a professional advisor can be easy and even inexpensive. Seek the help of a professional and don’t be afraid to ask questions, this is a big purchase and those you love most will be the ones affected.

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