Wednesday, June 15, 2022

When Is Life Insurance Necessary

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It Can Help Your Loved Ones Pay Off Debt

Why is life insurance important?

Certain types of debt don’t go away when you die, which means your loved ones may have to use money from your estate or sell off other assets to cover them. This could leave less money to pay for expenses.

Life insurance can help your loved ones pay for any debt you leave behind, including credit card debt, business debt, personal and/or educational loans and mortgage debt. At a time when your loved ones are already dealing with your loss, life insurance can help ease some of the financial burdens they may experience after your passing.

MORE How Life Insurance Helps Protect a Mortgage

Help Cover Bills And Debts

The same is true for paying for bills and other types of debt.

If you pass away with credit card debt or a car loan, for example, then that debt doesn’t disappear someone will have to pay for it. In many cases, that could be your spouse or partner, and, if you are single, your parents or siblings. Having life insurance can help cover these payments so the costs aren’t left to your loved ones.

Your life insurance policy can also help pay for your funeral service and burial. This can help alleviate the burden your loved ones might face trying to pay for it.

Planning For A Funeral

In 2019 the average funeral cost about £3,785 an increase of 0.7% from 2018 . Over 50s life cover could help to pay off this cost. Contributions for this type of life cover tend to be smaller than others as the payout is significantly lower.

Over 50s life cover differs from term life in that there is no fixed length to the policy; it simply exists as long as you live and pays out upon your death. That doesnt mean to say that you will pay indefinitely for a fixed sum of money though. You will stop paying premiums either after 30 years, on your 90th birthday or on the policy anniversary following your 90th birthday.

The payout doesnt necessarily need to contribute towards your funeral, however if that is your main motivation for taking out the policy then you might also want to consider a Funeral Benefit Option.

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What Is Life Insurance

Life insurance is an agreement in which an insurance company agrees to pay a specified amount after the death of an insured party, as long as the premiums are paid and up to date. This amount is called a death benefit. Policies give insured people the assurance that their loved ones will have peace of mind and financial protection after their death.

Life insurance falls into two different categories: whole and term. Whole life policies are a type of permanent life insurance, meaning youre covered for life as long as your premiums are paid. Some whole life policies offer an investment component that allows you to build cash value, taking the premiums you pay and investing them into the market.

Term life insurance, on the other hand, covers you for a set term. For instance, you may purchase a 20- or 30-year policy, depending on your age and how long you need coverage. Some policies allow you to renew your coverage after a certain expiration date, while others require a medical exam to do so. Between term life and whole life insurance, term life tends to offer cheaper premiums.

Reasons You May Need Life Insurance Even If You Think You Don’t

5 Reasons Why Life Insurance is Important

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.

Most people aren’t thinking about life insurance in their 20s, but it’s the best time to buy it because most people’s health declines with age. The longer you wait to buy a policy, the greater the eventual cost.

An average 20-something or 30-something nonsmoker can expect to pay between $10 and $50 a month for a term life policy depending on the coverage amount. That’s less than the cost of a gym membership to protect your family’s financial stability in your absence.

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Your;life insurance;needs change as you age, and you’ll need to consider;children,;,;divorce, retirement, and caring for;aging parents.;

If you don’t have life insurance, there are seven reasons you probably need it.

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Who Needs Life Insurance

Life insurance can be a helpful financial tool to have, but buying a policy doesnt make sense for everyone. If you’re single and have no dependents with enough money to cover your debts as well as the expenses related to deathyour funeral, estate, attorney fees, and other expenses then you may not need life insurance. The same applies if you have dependents as well as enough assets to provide for them after your death.

But if youre the primary provider for your dependents or have a significant amount of debt that outweighs your assets, then insurance can help ensure your loved ones are well taken care of if something happens to you. Having a life insurance policy could also make sense if you own a business or owe cosigned debts, such as private student loans, that someone else could be held responsible for if you pass away.

Keep in mind that life insurance by itself doesnt cover every situation. For example, a standard life insurance policy wont pay any disability benefits if you become disabled, nor will it cover long-term nursing care costs. But you can purchase disability riders or long-term care insurance riders for an additional premium cost that can cover those types of scenarios.

Life Insurance Can Ensure Your Business Survives

Todd and Chris started a business together and over the years it grew into a successful enterprise. Their financial advisor recommended using whole life insurance policies to make sure that if one partner died, their family would be taken care of, and the business would survive the loss.;

Todd purchased a $1 million whole life policy on Chris and vice versa. Years later Todd was killed by a drunk driver. Chris received the death benefit from his life insurance policy on Todd, which he used to buy Todds share of the business from Todd’s family.;

This arrangement allowed Todd’s family to be fairly compensated for his half of the business, while also allowing the business to survive without taking the major financial hit of paying off Todd’s family.;

This is called a buy/sell agreement and is a fairly common arrangement for small business partners.;

Save on Life Insurance

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Reasons Why Life Insurance Is Important

  • It Can Help to Pay for Future Education Expenses
  • Whether you’re married with kids, or have a partner or other relatives who depend on you financially, having life insurance;can be important. Life insurance provides money, or what’s known as a death benefit, to your chosen beneficiary after you die. It can help give your loved ones access to money when they need it.

    Understanding life insurance can help you plan for your family’s long-term financial needs. Here are five reasons why life insurance is important.

    Stay Away From Commissioned Salespeople

    Why Is Life Insurance Important?

    Woody Allen once said, There are worse things in life than death. Have you ever spent an evening with an insurance salesman?

    While Allen was referring to boredom, he could have been highlighting another drawback of commissioned salespeople. Simply put, the more you buy, the more they make, so theyre not objective.

    But avoiding commissions doesnt mean avoiding expert help. There are plenty of fee-only planners out there who can help you evaluate your need, then steer you to low- and no-commission policies, like those from TIAA-CREF and Ameritas. Sure, youll have to pay for the advisers time, but youll more than offset the cost with less expensive insurance and peace of mind.

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    Life Insurance: Is It Worth It And When Do You Need It

    Stephanie Faris|

    Modified date: Aug. 26, 2021

    Were all going to live forever, right? Okay, maybe not. But chances are, youll live out many more decades and even get a chance to enjoy those retirement savings youve worked so hard to build.

    Retirement isnt the only thing you need to plan, though. If, for some reason, you dont live to the ripe old age of 105, what happens to those you leave behind? In some cases, a good life insurance policy can make a big difference to your survivors. But life insurance isnt for everyone. In fact, in some cases, it may not be a wise idea.

    If you want to even begin to ballpark the cost of life insurance, you can answer super quick questions to get a few quotes to determine how much life insurance will cost you and how much coverage.

    Whats Ahead:

      Voluntary Code Of Conduct: Authorized Insurance Activities

      Canadas banks have agreed to be bound by a voluntary code of conduct that obliges them to provide clear, understandable disclosure in the documents related to authorized insurance products, including mortgage life insurance. Each bank is responsible for ensuring that its representatives implement, understand and follow this code. Each bank has a designated officer responsible for compliance with the code.

      Under the code of conduct, banks will provide each eligible customer who has been accepted for insurance coverage with disclosure documents that set out the following:

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      Do You Need Life Insurance After You Retire

          For most of your adult life, youve probably had life insurance. If it was offered by your employer as part of your benefits package, you may not have given it a second thought. You knew it was there but didnt know much about it. Or you might have taken out a policy as part of good financial planning, especially if you have children.

          But now youre about to enter retirementor maybe youre already there. Your employer isnt paying for life insurance anymore, and you have to decide whether to take out a new policy or enter your later years without one. Whats the right choice?

          Dont you get tired of hearing that theres no easy answer? Thats because of your bank and investment accountsand your needsare different from your neighbors’ or friends’. Whats appropriate for them may or may not be appropriate for you.

          Insurance Can Be Confusing And Its Hard To Know What You Really Need Or Want But Here Are Fivevery Good Reasons Why You Need Life Insurance

          Why is life insurance very important for us?

          As we grow older, get married, build families andstart businesses, we come to realize more and more that life insurance is a fundamental part of having a soundfinancial plan. Depending on your type of policy, life insurance is fairly cheap, which meanstheres no excuse not to;get coverage now. Plus, over the years, youll find comfort inknowing money will be available to protect your loved ones in the event of your passing. Here are afew other reasons why having life insurance is important.

          To Protect Your Family and Loved Ones

          If your loved ones depend on your financial support for their;livelihood, then life insurance is amust, because it replaces your income when you die. This is especially important for parents of youngchildren or adults who would;find it difficult to sustain their standard of living if they no longerhad access to the;income provide by their partner. You will also need to provide enough money to coverthe costs of hiring someone to cover the day-to-day household tasks, like cleaning, laundry, cooking,childcare and everything else a growing family needs.

          To Leave an Inheritance

          Even if you dont have any other assets to pass to your heirs, you can create an inheritance bybuying a life insurance policy and naming them as beneficiaries. This is a great way to set your kidsup for a solid financial future and provide for any;monetary;needs that will arise.

          To Pay Off Debts and Other Expenses

          To Add More Financial Security

          To Bring Peace of Mind

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          Provide For Lost Income

          One of the primary reasons people get life insurance is to help ensure their loved ones won’t face financial hardships if they pass away unexpectedly. If you’re married and have kids, this can matter a lot, especially if you’re the primary breadwinner. Without your income, your family might not be able to afford your mortgage or cover tuition costs. Your life insurance death benefit can help pay for these.

          Also, keep in mind, if you are a stay-at-home parent, the value you provide through your work with your kids and at home is important. If you were to pass away, your spouse would have to pay for the services you provide taking care of your family.

          Life insurance is important even if you don’t have a spouse or children. If you have a partner you share finances with, for example, they might not have the funds to cover the bills that you normally split.

          Who Can Skip Buying Life Insurance

              Eric is currently a duly licensed Independent Insurance Broker licensed in Life, Health, Property, and Casualty insurance.;He has worked more than 13 years in both public and private accounting jobs and more than four years licensed as an insurance producer.;His background in tax accounting has served as a solid base supporting his current book of business.

              Life insurance is tricky. There are scenarios in which its vital to your family, but there are also instances when it may no longer be needed. If you have term life insurance, there may be a time when having it no longer makes sense.

              Cash-value policies, on the other hand, accumulate value and provide the coverage you wont outlive, as long as you keep up the premiums. Whole life, variable life, and universal life are three of the flavors you can choose. Even cash value insurance shouldn’t just sit there, however.

              Not everyone needs life insurance. Those whove accumulated enough wealth and assets to care for their own and their loved ones needs independently in the event of their death can forgo paying for;life insurance, especially if it’s a term policy. On the other hand, there are people whom experts say should never be without life insurance; these groups of people are listed below.

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              You Have Private Student Loan Debt

              If your parents co-signed your private student loans, life insurance means they won’t be left with the debt if you die. Even if your parents weren’t co-signers, you don’t want the repercussions of having debt left behind to your estate, especially if you’re .

              Federal student loans are discharged on the death of the borrower. Unfortunately, if you die, private student loans become part of your estate debt. It’s at the discretion of the private lender whether to discharge your debt, according to the Student Loan Borrower Assistance program.

              Protecting Your Family’s Future With Life Insurance

              Money Makeover: Is Life Insurance Necessary?

              Understanding life insurance and how much coverage you may need can help when making long-term financial plans. Making plans to help support your family’s financial stability in the event that you pass could help to mitigate the stress and burden of an already difficult time. Depending on your financial goals and needs, life insurance could be an important part of this plan. For more information, consider speaking with a financial representative.

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              Why Is Life Insurance Necessary

              • Total0

              For Canadians, purchasing life insurance can be a touchy subject. Many people ask why life insurance is necessary when they have group coverage already through their company or other source. At first glance, it can seem an unnecessary additional expense for someone in this situation. However, there is no such thing as too much protection.

              If a company goes under or if benefits cut back, people might find themselves without adequate coverage, and whether it is to cover short-term or long term needs, everyone should look at coverage. When asked, Tim Doubroff, a licensed life insurance broker , stated that the most common reason people give him for wanting to purchase life insurance is in case something happens.

              For many people who purchase life insurance, while they do not want to think about the possibility of their passing, they do want to ensure that those they leave behind arent left in a lurch.

              One of the many reasons why life insurance is necessary is its ability to help you prepare for the future. According to Tim, you could use it as a form of income protection, or for a business, it could be used to facilitate a buy-sell arrangement between business partners or for estate planning purposes.

              • Both universal and whole life plans build up cash values within them that policy holders can use, take out a policy loan against, or cancel have those values returned. You can find more information on this;here.

              Do I Have Outstanding Debts

              Even if you don’t have financial dependents, debt is a good reason to have life cover.

              If you take out enough cover to satisfy any outstanding debts, like a mortgage or credit card, then they won’t fall to your next of kin if something happens to you.

              Life cover is a way to make sure you’re managing your own financial responsibilities, even if you pass away or become seriously ill.

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