Why Every Adult Needs Life Insurance



Life insurance is one of the most important financial planning tools, and every financial expert recommends having some form of life insurance for all adults. Although most people assume that life insurance is just for funeral expenses or just to leave some money behind for survivors, it has several other benefits.

Replacing Income for Dependents
When a spouse, children or elderly parents depend on an adult for income, it is possible to set up life insurance funds to replace that income in the event of death. While most people do this to provide income for young children and a spouse, it can also be set up to provide income to pay for help that a stay-at-home parent would have otherwise provided. 

Consider a situation where the husband works while the wife stays home with three children. If the wife died, the husband may still need money to pay someone to take care of the children, clean, cook and run errands. This means that both the wife and husband should have life insurance.

Covering Final Expenses
The most common final expense that survivors have to cover is a funeral. However, there are also other final expenses that most people do not stop to think about. Consider the previous example of the husband who works and the wife who stays home to care for the children. If the husband were to die and only left enough money for most living expenses and the funeral, the wife would face other expenses as well. Imagine that the husband had opened several credit card accounts and had taken out some loans in both of their names. The wife would still be liable to pay those debts if they were joint accounts.

Building an Inheritance
For those who do not have homes, valuables and other assets, setting up life insurance is a good way to leave an inheritance for heirs. It is possible to name several beneficiaries to receive portions of the total sum.

Paying State and Federal Death Taxes
To avoid leaving heirs with the bill for death taxes, many people set up life insurance policies. Survivors often sell the assets they inherit or wind up using some of their intended inheritance to cover these taxes if they are not otherwise provided for.

Making Charitable Contributions
For those who do not have heirs or do not wish to leave money to their surviving family members, it is possible to set up a life insurance policy to leave to a charity. This is a good final way to do something for a noble cause.

Creating a Savings Source
With some types of life insurance policies, it is possible to create cash value. If that value is not paid as a death benefit, the policyholder can borrow against the balance upon request. This is a good way to save money in the event of an emergency. Although it is best to have an additional savings account for emergencies, the money may be helpful if there is a major emergency that is extremely expensive or must be paid for upfront. For example, a policyholder who develops cancer and wants an alternative treatment may not be able to pay for it without borrowing from the life insurance policy. Since waiting could be deadly, it would be wiser to borrow against the policy.

There are plenty of good reasons to buy a life insurance policy, and there are different choices today for policies to fit nearly any budget. To learn more about the benefits of life coverage and which options are best for individual needs, discuss concerns with an agent.