Getting life insurance is one of the best ways to ensure that the family is financially protected after the policyholder’s death. Considering the importance of this type of insurance, it’s unfortunate that many people neglect getting it. A recent survey revealed that less than 50% of adult Americans have life insurance policies.
The perceived cost is the primary hindrance to getting life insurance for many people. When asked how much they thought it would cost to insure a 30-year-old in good health for $250,000, most respondents estimated at least $500 annually. But the real figure is only about $160 a year on average.
Clearly, many people have a mistaken idea of how much insurance costs. But knowing the expenses involved and the benefits that life insurance offers could convince more people to sign up for it.
Here are the main benefits of getting life insurance:
Life insurance payouts aren’t taxable
Now that you know how little life insurance costs, you might be more open to the idea of including the premium payments in your budget. But if you need another reason to sign up for a plan, perhaps the fact that insurance payouts are non-taxable will be enough to convince you.
That’s right: the lump sum that your beneficiaries will receive upon your demise isn’t taxable because it isn’t considered income as far as the Internal Revenue Service (IRS) is concerned. This means your family‒or whoever you named as your beneficiaries‒can claim the money without having to report it in their tax returns.
Life insurance ensures dependents’ living expenses
Perhaps the most compelling reason to get a life insurance plan is to ensure your family’s continued standard of living after you are gone. This is an especially important factor for the sole income earners in the family.
How much insurance should you get to ensure your family’s comfort and well-being? Insurance experts generally advise taking out a policy equivalent to seven to ten times the amount you earn per year. This should be sufficient to cover your family’s living expenses, utility bills, and your children’s education.
Life insurance isn’t just for sole breadwinners. Even if you and your spouse contribute jointly to the household, the loss of your income will be a considerable financial blow to the family’s finances. So even if your spouse earns their own income, you should still consider getting life coverage.
Life insurance can pay for funeral expenses
Not many people realize it, but many life insurance plans include coverage for funeral expenses. These are usually detailed in the “final expense” section of the policy.
Financial assistance can be essential in the untimely demise of the policyholder. Having funeral expenses paid for lifts a considerable burden from family members dealing with an unexpected tragedy.
Consider that burials cost an average of $7,640 in 2019. Having the insurance company step in to handle the cost means that families won’t have to resort to credit or use their own savings.
Life insurance plans may cover chronic and terminal illnesses
Life insurance can also pay for medical care and other expenses if the policyholder is diagnosed with a chronic or terminal illness. In such cases, all or part of the intended death benefit can be claimed under an “accelerated benefits” rider. This is usually allowable when the policyholder has a life expectancy of less than a year.
Life insurance can be beneficial for retirement
Finally, some life insurance policies come with accumulated cash values that provide additional funds on top of death and other benefits. This usually applies to whole, universal, and variable life insurance policies.
As the accumulated cash builds up, the funds can be withdrawn to cover expenses, such as a car purchase or the down payment on a home. It can also be used to augment the policyholder’s retirement savings.
Conclusion
Life insurance isn’t just for the rich and famous. Regardless of how much you make or your station in life, getting insured can benefit you in many ways. And it isn’t even as expensive as you might think. Considering its usefulness in augmenting your retirement savings, covering hospital bills, and ensuring your loved ones’ living expenses, there really is no reason for you to neglect getting life insurance.
About Rodrian Insurance
Rodrian Insurance specializes in giving you insurance solutions that perfectly match your business and personal life. We provide insurance options that offer excellent coverage while remaining within your budget, based on a thorough understanding and assessment of your needs, circumstances, and financial capability. Find out more about how Rodrian Insurance can fulfill your insurance needs. Call or text us at 262-781-4750, or email us at info@rodrian.com.
