In our lives, there are a number of financial milestones to prepare for in advance, whether it’s clearing student debt, paying your mortgage, or saving for retirement.
But beyond all the planned expenses, preparing for unexpected and unforeseen costs is vital. After all, even the most well-thought-out plans can change. Medication, home repairs, and even the loss of life can happen, and each may come with expensive price tags.
With that said, life insurance is an excellent way to build some financial security and ensure the protection of loved ones or an entrepreneurial venture prior to and after death.
Yet, despite its importance, many still lack coverage or are insufficiently insured. If you’re still unconvinced, we’ve laid out some benefits of life insurance in this article.
1. Pay off debts
We all accumulate debt on one level or another throughout our lives. Student loans and mortgages are two of the most common that you can include in your financial plan.
When someone passes on before any outstanding debts are completely paid off, it may potentially burden family, heirs, and estates.
With life insurance, you could give your loved ones a safety net if the debt falls on them. It can also prevent scenarios like having to sell off properties or assets from happening.
If you want to ensure you get what you need, be sure to hire a financial advisor when buying life insurance. Click here to get some financial planning advice if you live around the Bristol area, as these experts can help you out.
2. Protect a business
If the owner of a business venture dies, there’s a chance that partners and employees could end up with nothing.
The good news is that life insurance can be used to infuse financial certainty into a business by being an asset in and of itself. For starters, its benefits could boost finances to help an organization remain afloat as everything gets settled.
Another option is to have a buy-or-sell agreement where the policy is taken from every partner equal to their share within the company. In the event that one dies, the remaining partners can purchase the share of the heirs.
Business owners can also use specific policies to borrow some money against it. However, it’s worth noting that the accrual of cash value is only eligible for permanent or whole life insurance coverages.
3. Prepare for unexpected events
Conventional wisdom is that it’s a good idea to have an emergency or rainy day fund to remain prepared for unexpected events, such as automobile trouble or losing work.
While many insurance policies can compensate and protect against damage to your properties or belongings, you can’t put a price on human life. And the best tool for your financial plan in the event of your death is life insurance.
Everyone’s financial situation will be different, but understanding how beneficial life insurance can be to your financial plan will help you pick the policy that will best fit your needs.
More importantly, it will encourage you to invest in coverage because it’s something that everyone will need at one point in time.