…And why they should think about it anyway.
It’s not that buying life insurance is difficult. In fact, it’s actually quite easy, especially when you have an experienced broker to guide you through the process. The challenging part comes in actually deciding to buy life insurance.
Buying life insurance means facing one’s mortality. And many people don’t like to think about their eventual deaths. But the fact is that everyone will die at some point.
According to a recent study by LIMRA (a global research organization), more than one-third of people who do not have life insurance say they don’t have it because they don’t like thinking about death. Most of us think we will be able to earn enough money over our lifetime to leave a nest egg for our spouse, children and other loved ones. Though we applaud anyone who can do this, there is no guarantee that funds will be available when your family most needs them.
Problems occur when death comes before it was expected. The reality is that you never know when your time may be up. An accident, an un-diagnosed disease, or something sudden, like a heart attack, can happen at any time. If you’re not financially prepared, what will happen to your family?
Business owners also have to consider their business in addition to their family. Without you, what will happen to the business you’ve built up? Could it continue without your daily involvement? If not, life insurance can help provide the funds to ensure it survives to continue supporting your family.
Life Insurance Is Peace of Mind
The desire to provide the best for our loved ones drives the decision to buy life insurance. Once you’ve made the decision to buy it, life insurance isn’t morbid; it can end up providing great peace of mind to you and your family.
This goes especially for families with children. If one partner has been out of the job market for a while to focus on child-rearing, it can be very difficult for them to find work again. If the worst happens, they will be left not just worrying how they will live without their spouse, but also how they will provide for the rest of the family. When you have life insurance, you and your spouse will know they’ll have the resources to do what they want and create their own destiny.
Life Insurance Is Not as Expensive as You Think
The LIMRA study found a huge misconception about the cost of life insurance. People who do not have life insurance think it costs three times what it actually does. This means that many people who don’t have life insurance because they think they can’t afford it are probably mistaken.
If you don’t have life insurance—or if you don’t have enough—you can educate yourself on the types and costs of insurance. The cost of coverage not only depends on your age, gender, health and location—it also depends on the type of life insurance you buy.
Term insurance costs a lot less than permanent, or whole life, insurance. Term life insurance simply provides a death benefit and nothing else. When an insured dies, the policy will pay the death benefit to the beneficiary(ies) named in the policy.
Permanent insurance pays a death benefit as well, but it also has an investment component. When you buy permanent insurance, you pay more in premiums than you do for term coverage. A portion of your premium goes to fund the death benefit, and the other portion goes toward a savings component that grows tax-free.
When the savings component (the “cash value”) of your policy reaches a certain pre-determined amount, you can take out a policy loan or withdraw funds. Policy loans and withdrawals have implications for your life insurance coverage, but they have advantages over certain other investments. You can take out a policy loan even if you don’t qualify for other types of loans. You can also make tax-advantaged withdrawals. Any amounts over the basis amount (your initial investment) in the policy won’t count toward your taxable income.
We can help you explore the different types of life insurance and help you decide which works best for your family’s situation. It’s a loving decision to make and the time to make it is now. Please call us to make an appointment.