Life-insurance is a simple concept – you buy a policy that pays to your beneficiary or beneficiaries when you die. And, life insurance can offer numerous benefits to individuals and their families — and we’re here to tell you why life insurance matters.

Below are six reasons why life insurance matters:

  • Financial security for loved ones—Life insurance offers financial protection for families. If a policyholder passes away during the policy term, their beneficiaries can receive a death benefit, which may help cover expenses such as funeral costs, outstanding debts, and ongoing financial obligations like mortgages and education expenses. This assistance can be invaluable during a difficult period.
  • Debt protection—Life insurance can serve as a crucial tool for debt protection. Many individuals have mortgages, car loans and other financial obligations. If the primary wage earner dies, the life insurance payout can be used to pay off these debts, ensuring that the family home and assets are not at risk of being lost due to financial hardship.
  • Income replacement— Beyond immediate expenses and debt, life insurance can replace the income the policyholder provided to their family. This can be especially important for families with children or dependents who rely on that income for daily living expenses, education and future needs. Life insurance can help maintain the same standard of living and ensure that long-term financial goals are still achievable.
  • Tax benefits—In many cases, the proceeds from a life insurance policy are not subject to income tax. This means that the beneficiaries receive the full death benefit without deductions, providing an efficient way to transfer wealth to loved ones.
  • Flexibility—Life insurance can offer flexibility and choice, as numerous options are available. For instance, term life policies can offer coverage for a set period (e.g., 10 years). Alternatively, permanent life policies can generally cover an entire lifetime as long as premiums are paid.
  • Potential savings component—While not always available, some forms of life insurance may offer a savings component. Permanent life policies may accumulate cash value over time. Policyholders may be able to access this money while they’re still living, although this involves important considerations that should be discussed with an insurance professional.

The bottom line of why life insurance matters

Life insurance offers essential financial security, debt protection, income replacement and legacy planning. It provides peace of mind, helping ensure that loved ones can still achieve financial goals even after the policyholder’s death.

While many may assume life insurance is only helpful in transferring wealth or maintaining a lifestyle, anyone can benefit from life insurance. In fact, people with less wealth likely need more life insurance coverage since they may not be prepared to deal with unexpected financial risks and lost income.

In today’s uncertain world, life insurance is a critical tool for financial planning and lifestyle security. Contact us today to discuss a life insurance policy that aligns with your financial goals.