Why take out life insurance? There are a lot of reasons my clients take out life insurance. I have seen time and time again the relief that life insurance can bring when the worst happens. This is my list of the top 7 reasons life insurance is worthwhile.
1. You can’t predict the future. You don’t know what will happen
Benjamin Franklin once said, ‘the only things certain in life are death and taxes’. No matter how healthy you are, and how great your family health history is, you just don’t know how long you will live. Going out early whether through a car accident, cancer, heart attack or another tragic event is going to affect your family both emotionally and financially. Saying, “Oh, that could never happen to me” and not making plans for the possibility can be a gamble with high stakes for your loved ones.
2. Life insurance provides financial support to your spouse and children
One life insurance company uses the the slogan “Life Insurance is not for those who die, it’s for those who live.” This is very true. If you pass away, your spouse and children will lose your income. This could mean having to move from the home, that your spouse would have to get a second job, and that they could not afford to live the same lifestyle. With the death of a loved one, their lives are changed forever. If you have life insurance, you can prevent them from further hardship.
3. Your debts will not burden your family
When you have large debts such as a mortgage life insurance is very important. If your income is essential to paying off the debt, life insurance will prevent your spouse or family from losing the assets you have worked hard for. Particularly when the family home is involved, life insurance can reduce the financial and emotional stresses that they could experience from debts they can’t pay.
4. Your spouse could become disabled after your death and unable to work
It’s possible that your spouse, who might be caring for your children, could become injured or disabled after your death. She or he would then be unable to financially support the family. (Well, unless you have disability insurance, but that might not be enough.) If your spouse becomes a single parent, you are not there as the “back-up” should he/she become disabled.
5. You might not be able to obtain insurance later on when you do want it
Do you not have any children and/or aren’t married, and don’t have any family? You might be thinking, well there’s no reason to have life insurance. But, what if you do get married someday, and/or have children? By then, it might be too late.
You could have developed a serious illness that will prevent you from getting life insurance. If you get it now, and make the payments, you will still have life insurance by then.
6. If you become terminally ill, you will not spend your last days of life worrying about your family, and regretting that you didn’t purchase life insurance
Life insurance can be used to pay off your debts. If not, your spouse will probably have to pay it off. If you had a chance to have your debt payed off upon your death, leaving your spouse in better financial shape, shouldn’t you take it?
7. The life insurance will pay for your funeral and burial cost
The average funeral costs $7000. If you have life insurance, it will cover the cost of your burial and funeral, thus preventing your family from further financial hardship.
Of course, no amount of money can replace someone when they die. However, knowing that your loved ones will be financially secure should the worst happen can offer some peace of mind.
Donna has over 17 years experiance in the financial industry and is practised in all facets of financial planning, including retirement, wealth creation, gearing, superannuation and risk insurance.
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The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.