Why Buy Life Insurance?
Of all the insurance types we offer, life insurance may be the simplest to understand. Insurance companies offer only a small variety of insurance types which are described elsewhere on this site. But in any form, even with the most basic plan, if you own life insurance and you die, your beneficiaries get money, often times tax free. There may be instances where the insurance company holds off on paying a claim if they think fraud or a crime is involved in the death, but typically there is no arguing if a policyholder is dead or not. A death certificate is all you need to collect on the claim.
There are life insurance plans available to protect every stage of your adult life. The three stages of an adult life are:
- Householding
- Mentoring
- Legacy
Householding
Householding begins with your first apartment or house, and ends when your children become independent upon graduation from high school or college. When you first start your household, even before you have children, there are good reasons to have life insurance. Life insurance may protect co-signors on obligations like an apartment lease, a mortgage, college loans, or other debt. Could your roommates or spouse make the monthly obligations of a house hold (rent, utilities, insurance) if your income ended?
An obvious reason for owning life insurance is during the householding stage is child-rearing, when you are responsible for your children’s food, clothing, shelter, and education. It is common for new parents to start thinking about life insurance at this point in the householding stage. What happens, however, is that the new parents see the need for life insurance only up to the finish of the householding stage of life. This makes the sale of 20-year term insurance very popular, as that roughly coincides with the end of the householding stage of life. This may be short sighted however. Life insurance is an important asset during the mentoring stage as well.
Mentoring
Mentoring begins when your children become independent. Although your kids may not ask you for advice on how to live their lives, they will come to you when they need financial support. Financial support may include allowing them to move back into the household when the economy is bad and jobs are scarce. The child may opt for a graduate degree and need financial assistance there. Children may need loans and co-signors to start their own households. And they will almost certainly need financial support when they have children of their own. Could your survivors live the life you want for them without your financial support?
Legacy
Legacy refers to your own needs. You may ask yourself “who will remember me?”, or “how will I be remembered?”. If the answers to this question are troubling it may make your last few years of life unsettling. Knowing there is a lump sum of cash waiting in the wings upon your demise, that you control now (during your living days) through the power of a beneficiary change, provides peace of mind and a financial boost to your beneficiaries. Beneficiaries, by the way, may not be people but may include colleges, charitable organizations, or religious institutions.
Types of life insurance include the following:
Click the links above to learn more about each of the types of life insurance and which meets your needs.
