Life Insurance - Reasons to Get It
A life insurance policy is the foundation of your financial plan. The main reason people purchase life insurance is to replace the income of a breadwinner if they die. A typical situation is parents with dependents who will need the money to survive on and to pay for college expenses. Or, this can benefit a homemaker spouse who relies on their partners income. A sudden death is hard enough to deal with, let alone trying to find a source of income to make a living. Some people will get a small life insurance policy to pay final expenses like a funeral, burial costs, probate, debts, or medical and care expenses. These type of policies are typically sold as whole life insurance on an easy issue basis to older people. A life insurance policy can also create an inheritance for your heirs. By having a life insurance policy on yourself and naming them as your beneficiaries, you can leave your children or grandchildren with more than you might be able to give them otherwise.
Charity and Savings
People don't think of these types of uses as in "insurance" product. But many people will make a charity the beneficiary of their life insurance policy because by doing this they are able to make much more of a donation than donating the same amount they pay in premiums for the life insurance overall. Some types of life insurance will build a cash value. Read more about these here:The types of policies that build a cash value can either be paid out as a death benefit, or the insured can borrow against it or even take withdrawals as they need to. Because life insurance premiums don't seem like a voluntary savings type of situation, most people can create more of a savings with this type of a setup. Also, the interest made on the savings in the policy is tax deferred or tax exempt if it is paid as a death benefit.
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