Our mission is to spread life insurance education through our website.
Some clients want to know how life insurance works and other clients want to know if they need life insurance in the first place.
Is life insurance worth purchasing? Yes, life insurance is worth purchasing to protect our loved ones that we leave behind from financial devastation. If other people are financially affected by your death, life insurance is must-have insurance.
Life insurance rates have never been lower, thanks to medical advancements.
It seems like every year, the best life insurance companies are lowering their rates, and this competition is driving down the cost of life insurance big time.
Use our free rate comparison tool to see for yourself by comparing the rates of over 30 highly-rated life insurance companies.
Our article will break down the following points to breakdown why and why not life insurance is worth purchasing.
Feel free to skip ahead using the links below.
Why Life Insurance is Worth Having
There are several reasons why you should own life insurance.
In some cases, life insurance is mandatory.
For example, a judge could order you to have life insurance in a divorce decree, or you may be required to purchase life insurance for a small business loan.
However, what about when life insurance is not mandatory?
There are still plenty of reasons why life insurance is worth it, even if it is not mandatory.
Usually, we see people buy life insurance for income replacement, final expenses, debt protection, or legacy planning.`
If you have anyone reliant on your income for their livelihood, then life insurance is a must.
The most common dependent situation that we see is either minor children or stay-at-home spouses.
However, you could make an argument for other people, such as your parents.
Pays an income-tax-free death benefit to your beneficiaries to provide them income when you are no longer alive to do so.
As veteran life insurance brokers, we suggest calculating your death benefits based on the number of salaried years that you want to replace.
Everyone has burial costs and final expenses that must be paid when they pass away.
The average funeral costs around $8,000, but when you add in probate costs, burial plots, and other final expenses, that figure can quickly approach $15,000!
Even $8,000 is a lot of money for some people to pay out of the blue, which is why final expense life insurance is so important.
Even if you leave your heirs a paid-off home and cash in the bank, the probate process can be lengthy in many states.
It could be some time before your loved ones have access to the cash.
Life insurance passes to your beneficiary without having to go through probate, which means quicker access to funds.
This buys your loved ones valuable time while they get your final affairs in order.
Life insurance is a great tool to eliminate debts when you die, such as mortgage protection life insurance.
Many couples will purchase a home factoring in two incomes.
If one partner dies, the other may not be able to maintain their home and their lifestyle.
By purchasing mortgage protection life insurance, your loved ones can remain in your family home if you prematurely die.
Another area of debt protection we see often is buying life insurance to repay student loans.
We often will see parents co-sign for their children.
If their child dies before paying the loan back, their student debt will pass on to their parents.
No parent wants to delay their retirement to pay off their child’s student debts, especially after losing that child.
Buying life insurance will ensure that if anything happens to you, that your student loans will be repaid and not passed on to your parents if they co-signed.
Life insurance was used in estate planning to cover estate taxes in the past, but today, life insurance is used more for liquidity and flexibility,
The federal estate tax limit is in the millions, and many states are following suit.
The reality is that most families won’t trigger estate tax at these high levels.
However, life insurance still has uses in estate planning for illiquid estates.
If you have multiple heirs, dividing your estate is not as easy as it sounds.
Having siblings get equal shares of businesses, property, and real estate can lead to significant conflicts.
Leaving the hard asset to one child and life insurance to compensate the other children works well when the heir wants to sell the asset, but the others want to keep it.
Term Life Insurance vs. Whole Life Insurance
Often clients will ask us what is better term or whole life, but the reality is that both term and whole life are equally important for different needs.
Term life insurance is for temporary needs, like income replacement.
Eventually, your children will grow up and be financially independent of you.
You likely won’t need lifetime life insurance coverage.
A 20-year or 30-year term policy protects your family while your working and they need your financial support.
Once that need is gone, you can reevaluate your life insurance needs if you still need life insurance coverage at all.
Whole life insurance is more appropriate when your need is for the rest of your life.
An example of a lifelong life insurance need would be final expenses.
Eventually, everyone is going to die, but no one knows exactly when.
If you outlive your term life insurance, you run the risk of not having life insurance coverage in place when your family needs it the most to cover your final expenses.
Final Thoughts on is Life Insurance Worth Purchasing
Life insurance is worth purchasing for most people.
At one point or another, most people will have financial dependents or someone responsible for settling their affairs when they die.
That is why when you’re young and healthy, it is the best time to buy life insurance.
Buying a policy that you can grow into and can adapt as your needs change offers you great flexibility as you get older, making life insurance worth it in our view.
You can use life insurance to replace your income, repay outstanding debts, cover your final expenses and burial costs, and in estate planning.
Even if you want to buy life insurance with a pre-existing condition, it can still be affordable.
Use our free rate comparison tool to see the rates of 30 highly-rated life insurance companies, including the best no-exam life insurance companies.