While no government stipulations exist stating that an individual must have life insurance coverage, it is truly a disservice to yourself and your family not to consider it. This type of coverage gives you the peace of mind to know if you pass away, your family will have proper care in your absence.
In exchange for premium payments, the insurance company provides a lump-sum payment, also known as a death benefit, to your set beneficiaries upon your death. And why would this be important to you? Continue reading to understand the importance of life insurance coverage and your must-knows when choosing a product.
Why Life Insurance is Important
There are different circumstances in which you can have someone depending on you. Whether it be a wife and kids or a business partner who would suffer loss from your death, you need life insurance. The crucial question to ask yourself is: “Will my family be able to continue living comfortably without my financial contribution?” If not, the answer is simple.
Also, consider the immediate benefit life insurance has upon your death. Think about your family going through the most difficult time of their lives and additionally having to scrounge together the money to give you a proper send-off when prices for funeral expenses are only rising.
The Roles of Life Insurance
Four critical roles exist in a life insurance policy: the insurer, the owner, the insured, and the beneficiary. Each one holds a specific responsibility within the policy.
The Insurer. This role belongs to the insurance company. They are responsible for enforcing the policy and eventually approving (or denying) the claims.
The Owner. This position would be you or the individual who purchased the policy. The person is responsible for making the monthly premium payments to their chosen insurance company.
The Insured. The insurance policy establishes coverage based on this person. The owner and the insured can be two different entities. For example, a parent can purchase a policy for their child, or an adult child can have a policy for their aging parents. When the insured individual passes away, the insurance company pays out the death benefit.
The Beneficiary. Finally, the beneficiary is the person, trust, or other entity set to receive the death benefit once the insured passes away.
Good for Protection, Not Investment
It is critical to understand that life insurance is a valuable tool for risk management but not necessarily for investment. A few insurance options exist with investment features, such as a cash value policy, but better options remain. A life policy would not be considered a good investment compared with traditional investment opportunities like the stock market and traditional retirement plans.
Ultimately, life insurance can help you rest easy, knowing your family will be okay in your absence. This insurance umbrella can give peace to yourself and your family. Your partner will not have to worry about providing for your children, paying off your home, or sending your children to college. Nothing could be more vital than that.
Life Insurance Questions?
We hope that this information on life insurance is useful to you.
If you’d like to learn how we can help you plan your retirement, call Empower Brokerage at (888) 539-1633 to speak to one of our Life and Annuity experts or leave a comment down below.
Get affordable life insurance quotes by clicking here.
See our other websites:
This article was updated on 3/8/2024.