A person who has ever been a beneficiary of their deceased parent’s life insurance has the answer to why is life insurance important. If you meet such a person, it probably helped them maneuver hard times, and they would probably get one for their beneficiaries as well. This guide discussed some life insurance benefits that would prompt you to buy life insurance.
Why Is Life Insurance Important?
1. Source of peace of mind
Life insurance gives the insured peace of mind from different perspectives. One knows that their debt will be paid off if they die. They will not die and leave their lenders cursing the deceased and their family for failing to commit their debt repayment before their death. Credit life insurance is responsible for paying the deceased debts.
Secondly, one has peace of mind in case of bankruptcy or any financial challenges. If you have permanent life insurance, you can take cash out while still alive. You can use this money in other areas requiring financial commitment. This makes life insurance serve a similar purpose to savings.
2. Improving health outcomes
Even though life insurance is not health insurance, there are some cases where it can be used to pay your medical expenses. When you get ill and do not have health insurance, you do not have to suffer at home due to a lack of finances.
You can visit your desired hospital and ask whether they would accept your life insurance for payment. Remember, not every life insurance policy qualifies to pay medical bills. Your life insurance policy is accepted by a healthcare provider when it has a living benefit.
If your life insurance has a living benefit, you can enjoy timely and quality healthcare. You are better off, unlike a person with no life and health insurance; they might suffer poor healthcare due to late medication.
3. It is an investment
Not every life insurance is an investment. If life insurance is only paid out in the event of your death, this will benefit your beneficiaries. However, you can count this one as an investment if you have permanent life insurance.
When you pay your premium for permanent life insurance, some portion is allocated for the cash value reserve. You can withdraw from this cash value reserve when you are still alive. However, such allocation is not available with term insurance. This disqualifies term insurance as an investment.
4. Provides certainty
Death is a hard conversation to have and preempt. However, it is inevitable for all of us. Some people are bold enough to think about life after they are gone. They want to have some sort of control even after they are gone.
This control is best guaranteed by insurance. When you have insurance, you can control the life led by your children and your spouse. You know how their expenses will be met even after you are long gone. This is a way of protecting the dignity of your family and future-proofing their financial stability.
5. Replaces a lost income
One can use their life insurance to replace a proportion of their income. This can happen when one is still alive or has passed away. Surprisingly, some insurance policies allow you to control the timeframe they replace your income.
Let’s take, for instance, term insurance. You could take 10 years of term insurance when you take term insurance. It could cover a proportion of your income during this time, and your family would not note a difference.