The idea of paying for life insurance bothers some people. After all, if you pass on, you don’t end up benefiting. The reality, though, is that life insurance isn’t meant for you. It’s designed to help your loved ones if you pass on prematurely.
As you consider your options for coverage, remember that life insurance is about your family:
1. Life insurance covers funeral costs
Even if you don’t have a huge policy, you can still help your loved ones. Life insurance can cover funeral costs, which can be a big help. Many funerals run anywhere from $600 to more than $10,000, depending on the venue and what services are chosen. Many grieving families aren’t prepared to come up with that money. With life insurance, your family is somewhat protected and can at least cover the costs associated with your passing.
2. Life insurance can pay off debts
If you have debt, including mortgage debt and car loans, it can be overwhelming for your family to try to keep making payments after you pass, especially if you're the primary breadwinner. With life insurance, it’s possible for your loved ones to use the payout to get rid of the debt and start fresh with no obligations. Many experts recommend that you buy life insurance coverage that can pay off your debts if you pass on, so your family won't be left to pick up the pieces.
3. Life insurance acts as income replacement
Without you to earn money, how would your family survive? One of the best reasons to get life insurance is so that you can ensure that your family has income. Figure out how much your family would need each year to survive until your kids leave school, and you can get an idea of how much coverage you need. You should always tweak your coverage based on your needs, but you can get an idea of how much you need by thinking of replacing your income. With income replacement, your partner might not have to work as much, freeing up more time to take care of your kids after you’re gone.
4. Life insurance can provide a future for your children
Even if you don’t have any debt or worry about income replacement, life insurance can still provide a benefit to your family. Many people expect to use life insurance as a helpful backstop for college. Purchase life insurance coverage that can cover college costs if everything else is taken care of. With the help of a life insurance payout, your children can have a better life, even if you aren’t around to see it.
5. Life insurance offers peace of mind
Finally, life insurance offers peace of mind. You know that your family is protected. More importantly, your family knows that if you pass on, they won’t be left in big trouble. You can’t put a price on the type of peace of mind that life insurance offers your family, as well as you.