Why You May Need Life Insurance
Life insurance could be one of the most important purchases you may ever make. If a tragedy should happen, proceeds from life insurance may help your family pay the bills and keep their plans for the future. If someone depends on you financially, you need life insurance.
The Basics of Life Insurance
Life insurance is a contract between a life insurance company and the policy's owner. The insurance company under the terms and conditions described in the policy, agrees to compensate a named beneficiary on the death of the insured person. When the insured dies and the policy is in force, the company will provide payment to the beneficiary in accordance with the policy terms and the settlement option chosen by the beneficiary. Life insurance is intended to help to provide funds to those who are financially dependent upon the insured.
Why an Individual Might Need Life Insurance
Individual Needs for Life Insurance include:
- Funeral - Life insurance proceeds may help to provide the money to pay funeral and burial expenses.
- Debt - Personal bills, credit card debt, student loans, and personal notes may be paid by using life insurance proceeds.
- Mortgage Protection - The proceeds of a life insurance policy may help to pay off the mortgage or provide an income stream to pay the monthly mortgage or rent payments.
- Income Replacement - In the event of an individual's untimely death, life insurance proceeds may help to create an income stream for the surviving family members.
- Education - Life insurance proceeds may be used to fund education costs in the event of premature death.
- Taxes - A life insurance policy may provide funds to help pay federal estate and state inheritance taxes.
- Donations - A life insurance policy may be used to provide funds for charitable donations.
- Gifts - Life insurance proceeds may be left as a gift to a relative or other individual.
Business Needs for Life Insurance include:
- Key Person - A life insurance policy may be used to help protect a business from the loss caused by the death of a key employee or owner.
- Business Continuation - Life insurance may be used to help fund a buy/sell agreement or stock redemption plan.
- Business Loans - Life insurance purchased on a key employee or business owner may be used to help pay off the debts of a business.
- Employee Benefits - Life insurance is commonly included as an employee benefit.
