Life insurance offers two important benefits. The first benefit is that it protects your loved ones against the financial consequences of an unexpected death. The second advantage is that it provides living benefits.
The financial effects of death can be devastating. When you lose a spouse, parent, child, sibling or grandparent, the emotional turmoil can be extremely severe. Yet, the financial repercussions can be even more overwhelming than the loss itself. With no life insurance, surviving family members are often thrust into a position of acute financial hardship. Not only are they are left dealing with the loss of a future income, but they must also handle the immediate outlay of finances demanded by the death and burial expenses that have been unexpectedly generated.
Looking at mortality statistics will show you that a large number of people die every year, before reaching a normal life expectancy. What if the deceased is a breadwinner and they die prematurely? The consequences are tragic in so many ways. Survivors are not only forced to deal with intense heartache, but they must also face some significant financial consequences, as well. They must figure out how to meet daily living expenses, minus one household income.
Aside from the cost of the funeral, other expenses survivors must contend with include executor's fees and estate administration costs. Outstanding debts, like car loans, mortgages, credit cards, medical expenses, promissory notes and death taxes, will fall on the shoulders of the survivors, and must be paid. There are state and federal taxes to consider, as well.
The future security of your loved ones is another factor in a premature death. Just basic living expenses, the mortgage, and raising and educating children are some of those concerns. Actually, it doesn't matter what financial obligations are left behind, the only option your survivors have is to pay them, and that takes money. If you want to assure yourself that your family is not forced to deal with the financial devastation a premature death can cause, then a life insurance policy is the perfect answer.
Some survivors may have a time during which it will be difficult to work, and some may have to think about a survivor's blackout period. This is a time where social security stops paying the surviving spouse, because dependent children are no longer a factor. These events are difficult if no monies are available. Also, some families try to plan for a surviving spouse's retirement needs. Because of the fact that life insurance can generate an immediate estate, at a time when it is most needed, it is a means of estate building.
An added advantage of life insurance is its living benefits. Some permanent policies provide policyholders with a cash benefit, in addition to the death settlement. This cash value belongs to the policyholder. Insurance companies allow the policyholder to make withdrawals from the cash benefit, which can then be used by the policyholder for any reason. The policyholder can also take out loans from their insurance company, and they use the policy's cash value as their collateral.
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