Life insurance policies can be purchased from insurance providers. The policyholder pays a premium each month and in return the insurance company will pay out the predetermined sum of money to the beneficiary in the event of the insured’s death. In the US alone, almost 28 million life insurance policies were purchased in 2018, per statistica.com. Life insurance policies can be purchased for almost any amount and the death benefit payment amount, along with other factors, determines the premium paid each month. The specifics of your life insurance policy are agreed upon by you and the insurance company and become a legally binding contract.
If a $100,000 life insurance policy is purchased and the purchaser designates their spouse as the beneficiary, upon their death, their spouse will receive a payment of $100,000 from the insurance company. The policy must be in effect and up-to-date on payments in order for the death benefit payment to be made.
There are two types of life insurance policies. The first type of policy is called a term life insurance policy and is in effect for a set number of years. The second is called a permanent life insurance policy and is in effect for the life of the insured. There are positives and negatives for both types of policies, and you should take the time to research and decide which type of policy is right for you.
Keep reading for the 10 reasons why you should consider purchasing a life insurance policy.
10. Peace of Mind
Having a life insurance policy can give you great peace of mind, especially if you are the main source of income for your family. If your death could possibly cause great financial burdens for your family, this can be a stressful thought. Having a life insurance policy in place can help ease your worries about what could happen to your dependents when you pass away. It can also reduce financial stressors in the present, as you will not have to focus on building up financial wealth and saving money for after you are gone. Life can be stressful enough without these worries.
9. Funeral Expenses
Even if you are not the main source of income for your family, death comes with a number of expenses that many fail to plan for. Funerals can be very costly, and if you do not have financial reserves, those costs fall on loved ones. Having a life insurance policy, even a modest one, can ensure that your family is not laden with financial stress while they are grieving. The average funeral can cost between $5,000 and $10,000 for embalming, viewing, burial services, etc. Having a policy that will cover these expenses will put your mind at ease.