We all know that it’s important to have a life insurance policy. So, what are the reasons to buy life insurance? If you don’t have one, then why? Let’s take a look at some of the reasons why you should get a life insurance policy. There are plenty of obvious reasons, but there may be a few that do not come to your mind right away. Here are some of the most basic reasons.
Reasons to Buy Life Insurance
Nothing is free today, not even dying. Yes, some people are so broke, they can’t even afford to die. We urge you to do a little research on how much a funeral costs where you live. The cheapest funeral that you can get in New York City will still run in excess of $8000. Does your family have that much in savings that such an unexpected event will not make a dent in the monthly budget?
Lost Income Replacement
If you go to work or otherwise generate an income that others depend on, what happens to that income should you pass away? Does it go away with you? If so, what plan do you or your dependents have to replace that? Life insurance is a good way to let your dependents live on without having to scramble for every dollar. Especially at such a difficult time.
If something happens to you and you’ve been putting your money into your home or other assets, how long will your dependents last before they need to liquidate these assets? Besides assets, such as real estate, you also need to have liquid money. In other words, money to pay the day to day expenses. This is especially a big issue in the real estate business. Investments in real estate require lots of money, but the liquidity is very difficult. The result is that you may be a millionaire in paper, but struggle paying for a full tank of gas.
One way a life policy can be used is to protect your mortgage. This is usually performed through a Decreasing Term Life Insurance. We’ll devote a separate article to this topic. The general idea is that as your mortgage principal decreases, so does the death benefit and thus premiums. It is a very good way to protect your home.