Why Do We Need Life Insurance?

 

Are you wondering, Why do we need life insurance?

Many consumers and financial experts agree that life insurance can provide

financial security and protection for your loved ones at a time when they need

it most. But, why do people need life insurance? How does it help us?

Life insurance can provide a secure foundation for your financial planning

program. Life insurance provides much needed financial security in several

situations, including:

It is tax Free to the recipient

Income recieved as a loan or as a beneficiary of a payment the funds are FREE of state and federal taxes 

It helps replace lost income

Most life insurance policyholders are also the breadwinners for their families. In case something happens to them, their life insurance policy would provide some amount of compensation for the income for the household that was lost with the death of the policyholder.

It helps pay off the deceased’s debts

In the course of routine life, one tends to have some form of debt on them. The liability to pay off these debts falls on their family. If the deceased had taken out a life insurance policy, these debts would be cleared using that fund.

It acts like an emergency fund

In case a life insurance policy holder dies during a financially weak time for their family (like when they have a huge mortgage on the house or are halfway through the payment of another asset), the payment that their family receives can be used as an emergency fund to cover these expenses.

It can be used to cover funeral or medical expenses after death

If a person has passed away after a long illness, their life insurance payout can be used to cover the medical expenses incurred during their treatment. Sometimes, dependents of the deceased also use the payment received from the life insurance policy to cover the expenses of the funeral.

It is a fund for one’s dependents

Life insurance benefits help the deceased’s family acquire a lump sum of one’s life savings which can be used to for the education of kids, their weddings, etc. it helps the surviving family of the deceased stay financially strong after the loss of an earning member of the family