Life insurance is one of those things that we all know we should have, but it’s often hard to understand. And it can be intimidating to think about making a big decision like this on your own. So we wanted to break down what life insurance is, how it works and why you need it.
What Is Life Insurance?
Life insurance is a way to protect the people you love in case something happens to you.
It is an agreement between you and an insurance company where they agree to pay out a certain amount of money if something happens to you. So, the insurance company will pay out that amount of money to your beneficiary -the person or people who will receive the payout. You can name nearly anyone as your life insurance beneficiary and they can spend the money however they need it.
Who Is Life Insurance For?
The better question to ask is: who doesn’t need life insurance? You might think that because you have no one that is financially dependent on you at the moment that it is not necessary. However, it doesn’t hurt to start looking today. Why? Because your premium rate is always changing based on your age, health status, and other factors. Your life insurance will not be as affordable in the next 10 years than it is today!
Here are five common scenarios where life insurance proves its worth:
- Parents: Life insurance for parents is essential for anyone who has young children. If something were to happen to you, your family could be left with a large amount of debt from medical bills—and no way to pay them off quickly. A life insurance policy can help reduce the burden of those debts and keep your family financially stable in the event of an unexpected death.
- Spouses: Many people don’t realize that they need life insurance until they get married. But if something were to happen to you before retirement age and your spouse had no other income sources (like Social Security), they would have difficulty paying off your mortgage, credit cards, and other debts all on their own—especially if those debts are shared between spouses (like joint accounts). A simple policy can help ease that burden on your spouse’s shoulders and allow them to focus on grieving instead of finances during this terrible time in their lives.
- Small business owners: If you own a small business and want to leave it to someone else when you die, life insurance is a great way to make sure that happens. You can buy policy coverage specifically designed for small business owners like yourself, which allows you to choose who gets the money from your policy after your death (or before). This makes it easier than ever before for small business owners to pass on their businesses when they die—and it can help keep their loved ones safe financially as well!
- Retirees: Life insurance can help retirees generate an income stream that supplements what they receive from Social Security or other sources of retirement income, helping them meet their financial obligations while also enjoying the freedom that comes with no longer working full-time.
- Paying Off Debts And Loans: If you have a mortgage, credit card payments, or other debt that you need to make on a regular basis, life insurance can be a great way to protect your family from the consequences of losing your income—and from the stress of having to find a way to pay off those debts without you. Life insurance can also be used as collateral for loans—if you need more money than what’s in your bank account, but aren’t able to get another loan because of bad credit or lack of collateral, life insurance can help secure the loan.
Life insurance isn’t just about money—it’s about making sure that people who love you will be taken care of while they’re still here with us on this Earth.
