Why should I buy life insurance?
Why should I buy Life Insurance?
Art Glasgow, Peck-Glasgow Insurance
May 31, 2011
Being in the insurance business for 25 years has brought some interesting questions to my table. One of the most basic and common questions are brought by buyers new to basic financial planning. Most experts consider life insurance to be a basic building block in sound financial planning. Here are some basic reasons that most individuals need to consider the purchase of life insurance.
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1. Pay final expenses. Life insurance is a good funding source for paying your final expenses for things such as funeral and burial costs. Probate costs and other administrative costs, final debts, medical costs not covered by health insurance are also final expenses that must be covered after death.
2. Replace income for your family. Your family depends on your income to live and pay the expenses of living! Life insurance can replace that income for them if you die. Most commonly, life insurance is used when parents die and leave young children that have no other means of support. It can also apply to couples that depend on each others income, or even to supplement income that is reduced when a partner dies and government or employer sponsored benefits are reduced. The old saying is ” life insurance is for the living, not the dead”! So if you love those you live with, protect them with life insurance.
3. Create an inheritance for your heirs. Even if you have no other assets to pass to your heirs, you can create an estate by buying a life insurance policy and naming your heirs as beneficiaries.
4. Make significant charitable contributions. You can make your favorite charity a beneficiary of a life insurance policy. At your death, through life insurance the contribution will be much larger than if you donated the cash equivalent of the policy’s premiums.
5. Pay the federal and state “Death” taxes. Life insurance benefits can pay estate taxes at your death or your spouse’s death so that you heirs will not have to liquidate other assets or take a smaller inheritance. This is a valuable tool in estate planning and should be used in conjunction with a plan directed by your tax attorney.
6. Create a source of savings. At one time, I thought I knew it all about investing and saving. The permanent life insurance policy was not much of a consideration to me as it was “boring” compared to stocks and other investments. Over time, and through the ups and downs of our economy, I have come to realize the importance of permanent life insurance. The policy’s cash value builds and is tax deferred until the time that you might need to “withdraw” it for other uses. Buying a cash value type of policy can create a kind of forced savings plan. It is also tax exempt if paid out as a death claim.
These are some uses of life insurance and provide some really good reasons of why you need to purchase life insurance. Premiums are generally very affordable. To learn more about life insurance and how it can help meet your individual needs, please call a Peck-Glasgow Insurance Agent in Alabama to help you with your life insurance needs.