To understand why everyone should have life insurance, a person needs to know how life insurance works. Simply put, a life insurance policy is an agreement between you and an insurance company; you pay a monthly premium; in exchange, the insurance company pays out a lump sum of money upon the insured’s death.
There are different types of life insurance; an insurance agent can help you find the best fit for someone depending on their needs and goals. An insurance agent can assess a person’s income and other risk-related factors to determine their monthly premiums.
Contrary to popular belief, life insurance isn’t solely for covering final expenses after someone dies; over the years, life insurance has evolved into a valuable option for building wealth and even tax-free investments. Life insurance can largely benefit people from every age group.
The younger you are, the cheaper your monthly premiums will be, and the less likely you are to get denied coverage. If a person develops health issues, later on, they won’t lose the coverage and premium they obtained as a kid.
A low monthly premium for a child can go a long way to secure their financial future. A life insurance policy builds cash value; it’s like setting money aside for them each month that will only accumulate cash value with time. Once the child turns 21, they can either retrieve the cash value of their policy or keep the policy and have life coverage.
Young Single Adults
A young single adult, although the chances are low, still needs to think about what will happen with their debts and funeral expenses if they die. The average American graduates college owning an average of $35,000, and on average only have around $2,000 in savings. If a person dies with outstanding loans, the debt is transferred to their next-of-kin. A life insurance policy is intended to tie up these sorts of loose ends if a young person should die suddenly. Funeral costs don’t come cheap—the typical cost of a funeral and burial is between $7,000 and $12,000. No one wants to burden their parents or other loved ones with unexpected funeral costs, loan debt, or other expenses in case of sudden death.
Parents and Couples
Life insurance is an extremely valuable option for people with spouses or children that depend on their income. A life insurance policy would serve as an income replacement for the loss of the policyholder. Life insurance would be a way to make sure that the surviving family members would be taken care of—securing that the mortgage and other debts are paid for, final expenses, and other financial needs—without burdening the living spouse and children.
Retired Individuals and Seniors.
A lot of older people still have children or grandchildren that depend on them for financial help.
A life insurance policy for older people would ensure that their funeral and other expenses acquired by their death would not be left up to their loved ones to cover. More significantly, a life insurance policy can be used as a legacy for their loved ones when they die; they can leave a significant amount of money to family members or even a charity or church of their choice.
In all of these cases and different stages of life, life insurance provides peace of mind. Working with an insurance agent that pairs you with the best fitting policy for your needs means that you are planning for the most guaranteed part of life—death. Life is unpredictable; however, unpredictability is not a problem when you know for certain that when you die, your loved ones will have financial protection.