Top 10 Reasons to Purchase Life Insurance

                                                                                         

If you ever want to bore someone to death or make them run for cover, just bring up life insurance… trust me, just those two words seems to make people clam up and start looking at the clock. Despite the fact that we all know we are going to die some day, we just don’t like to think about it. And worse yet, we really don’t want to plan it in so much that we are going to actually plan on giving money away upon our death. But in reality, most people don’t actually buy “burial life insurance” if you can actually call it that. Life insurance has many more purposes and there are many more important reasons for purchasing it than just for a burial policy.

Many people don’t realize that life insurance plays a very important role in estate planning. Life insurance can help pay for estate taxes allowing heirs more time to make decisions on selling property. Life insurance can also help loved ones replace lost income. Let’s face it, we don’t have a crystal ball and we don’t know when we will die. It is possible that we will die prematurely and leave our spouses without our income. Ask yourself this question: if you weren’t here tomorrow, would your spouse be able to survive without your income without having to make drastic changes? Most people would have to answer that question NO! That’s where life insurance makes a big difference.

In addition to personal reasons, life insurance can be especially helpful for businesses that are partnerships and are concerned about the death of a partner. If one partner dies, the other partner can find themselves in business with the spouse or relative of the deceased partner. This can cause serious problems for the business. So, to avoid these issues, the business will take out life insurance out on each business partner. This type of life insurance funding is called business continuation insurance policies. This can also be done with an employee who is extremely important to a business and would put a financial burden to the business if that employee died. This type of policy would be paid for by the business and is called a key man insurance policy.

Life Insurance can also help plan for retirement. For people who have a spouse and will be retiring with a pension, life insurance can be used to help get the largest benefit from the pension without putting the spouse at risk. This concept is called pension maximization. Instead of Mr. Jones, for example, taking a lesser monthly benefit so that upon his death his wife would continue to receive a monthly benefit from his pension, Mr. Jones takes the life only benefit and then Mr. Jones takes out a whole life insurance policy for an amount that would provide that benefit that Mrs. Jones would be receiving in income from the pension upon his death. Instead of the income coming from the pension, Mrs. Jones will receive a check from the life insurance company that she will take to her life insurance agent who would assist her in investing it in something that would provide her the month income she would need.

These concepts are examples of what life insurance can be used for in addition for the tradition use of protecting your family if you died prematurely.

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