5. Eliminate Debt
Most, if not all, households in the US have some amount of debt. In the event of your death, your spouse will be responsible for those debts, and if they do not have the income or financial stability to pay them, it can be devastating. Knowing that your family will not be struggling to pay any debts can reduce worries. This is another important reason you should consider purchasing a life insurance policy.
4. Payment of Estate Taxes
The federal and/or state taxes on your estate can be quite significant based on the assessment of your estate at the time of your passing. If you take into account these taxes, you can ensure that your insurance policy can cover the amount and your estate will be passed to your children or other beneficiaries clear of these taxes.
3. Business Partnerships
Having a business in which you have a partner is also an important reason to consider life insurance. When you die, your business partner could be saddled with the entirety of any joint debts the business has at the time. If each partner purchases a policy, this can be avoided. The death benefit of the policy should be enough to purchase the shares of the company left behind and can allow the partner to pay off debts without struggling.
2. Mortgage Payoff
Your mortgage is probably the biggest debt you can leave to your family when you die. Just because you are no longer living doesn’t mean that your mortgage payments go away. If you do not have a life insurance policy that can cover the remainder or a large part of the mortgage for a period of time, your family may be forced to sell the home. The home could even go into foreclosure if there are not enough financial assets to cover the payments until other arrangements can be made. In the case of your mortgage, you can even purchase a separate mortgage life insurance policy for relatively low cost that is specifically allocated to paying off your mortgage when you pass away.
1. Build Cash Value
The final reason you may want to invest in a life insurance policy is to be able to leave a considerable amount of wealth to your loved ones when you pass away. This can be for a multitude of reasons, but overall the death benefit can provide for your family, cover final death costs, and leave a considerable financial cushion that can benefit loved ones for years to come.
In closing, there are many reasons why you may want to explore options for life insurance. It is important to research policies and discuss with your spouse, children, or business partner what financial support would be most helpful in the event of your death. Many people avoid the topic of death, and rightfully so. It can be a very emotional topic; however, it is important to plan for in order to give you peace of mind and ensure that your loved ones are provided for when you are no longer living.