What is life insurance?
Life insurance is an agreement between an individual and their insurance company that provides financial security to the policyholder’s dependents in the event of their demise. Simply put, if the policyholder suddenly dies, the insurance company is under obligation to pay their family members an agreed-upon sum of money based on the terms of the policy. This payment can be issued in a lump sum, annually, or over several months based on the agreement.
Two main categories of life insurance
What is life insurance?
Life insurance is an agreement between an individual and their insurance company that provides financial security to the policyholder’s dependents in the event of their demise. Simply put, if the policyholder suddenly dies, the insurance company is under obligation to pay their family members an agreed-upon sum of money based on the terms of the policy. This payment can be issued in a lump sum, annually, or over several months based on the agreement.
Two main categories of life insurance
Term life insurance is a temporary policy that lasts between 10 to 30 years and is the most popular and affordable option. This plan is most suitable for young families or families with temporary needs such as a mortgage.
Permanent life insurance is a policy that lasts for the policyholder’s lifetime and provides a death benefit and a savings component that accumulates over time. This plan is most suitable as part of an estate plan.
Five reasons why you need a life insurance policy
Many people feel uncomfortable or anxious about life insurance and find it difficult to broach the subject with their families. However, life insurance can be considered protection from the unexpected. Here’s why it’s important:
To cover your end-of-life expenses
The average funeral cost in the United States is $7,848, according to the National Funeral Directors Association. According to the May 2021 National Occupational Employment and Wage Estimates issued by the U.S. Bureau of Labor and Statistics, the average annual wage is $58,260. Consequently, a funeral would cost the average individual two months' salary. A life insurance policy would cover these costs at no expense to the deceased’s family.
To make up for lost income in the home
Loss of wages can significantly impact a family after the death of a loved one. In cases where the deceased is the sole breadwinner or earns most of the household income, a life insurance policy would ensure that their dependents can maintain their quality of life despite losing an important family member.
To pay off debts and bills
When an individual dies, their debts do not die with them; it’s passed on to their estate. Life insurance ensures that the debts, loans, or bills an individual has left behind are covered. This policy is especially beneficial in cases of mortgage payments.
To pay for the education expenses of a child/children
In cases where the deceased had young children, a life insurance policy would ensure that the child can still further their education despite losing someone who supported them financially.
Provide peace of mind
Every individual wants to know that their family is financially secure and able to maintain their standard of living after they’ve passed away. Life insurance assures the policyholder that their dependents will have financial security amid tragedy.
Permanent life insurance is a policy that lasts for the policyholder’s lifetime and provides a death benefit and a savings component that accumulates over time. This plan is most suitable as part of an estate plan.
Five reasons why you need a life insurance policy
Many people feel uncomfortable or anxious about life insurance and find it difficult to broach the subject with their families. However, life insurance can be considered protection from the unexpected. Here’s why it’s important:
To cover your end-of-life expenses
The average funeral cost in the United States is $7,848, according to the National Funeral Directors Association. According to the May 2021 National Occupational Employment and Wage Estimates issued by the U.S. Bureau of Labor and Statistics, the average annual wage is $58,260. Consequently, a funeral would cost the average individual two months' salary. A life insurance policy would cover these costs at no expense to the deceased’s family.
To make up for lost income in the home
Loss of wages can significantly impact a family after the death of a loved one. In cases where the deceased is the sole breadwinner or earns most of the household income, a life insurance policy would ensure that their dependents can maintain their quality of life despite losing an important family member.
To pay off debts and bills
When an individual dies, their debts do not die with them; it’s passed on to their estate. Life insurance ensures that the debts, loans, or bills an individual has left behind are covered. This policy is especially beneficial in cases of mortgage payments.
To pay for the education expenses of a child/children
In cases where the deceased had young children, a life insurance policy would ensure that the child can still further their education despite losing someone who supported them financially.
Provide peace of mind
Every individual wants to know that their family is financially secure and able to maintain their standard of living after they’ve passed away. Life insurance assures the policyholder that their dependents will have financial security amid tragedy.
If you are in need of an eldercare services as it relates to general estate planning please contact us at Hishaw Law LLC for a free consultation.
