Life insurance is an essential product that can provide financial security to your dependents, loved ones or other designated beneficiaries in the event of your unexpected death. Here are some of the reasons why life insurance is so important:
- Protects Your Family’s Future: Life insurance can help protect your family’s financial future by providing them with a source of income after your death. This can help ensure that your family can continue to pay for important expenses such as mortgage or rent payments, transportation, food, utility bills and education costs.
- Covers Outstanding Debts: If you have outstanding debts, such as a mortgage or a car loan, life insurance can help ensure that those debts are paid off in the event of your death so that your survivors don’t’ have to burdened with them after you’re gone. The life insurance proceeds can also pay for your funeral expenses and other debts, like personal loans and credit cards. This can ensure that your assets are not depleted by outstanding debts and that your heirs inherit the full value of your estate.
- Provides Peace of Mind: Knowing that your dependents and loved ones will be taken care of in the event of your death can provide you with peace of mind. With adequate life insurance protection, you can rest assured that your beneficiaries will be able to cover their expenses and maintain their quality of life.
- Builds Cash Value: Some life insurance policies, such as whole life insurance, can build cash value over time. This cash value can be borrowed against or used to pay for insurance premiums later in life.
- Assures Business Continuity: If you own a business, life insurance can be used to ensure that the business can continue to operate after you pass away. The death benefit can be used to buy out your share of the business or to provide funds for a new owner to take over.
- Covers Estate Taxes: Depending on the size of your estate, your heirs may be subject to estate taxes upon your death. Life insurance can be used to help cover these taxes and prevent your heirs from having to sell assets to pay them.
What is the difference between term life insurance and whole life insurance?
Term life insurance provides life insurance protection for a specific period of time and a cash benefit upon death. Premiums are generally lower than whole life insurance, but can increase as you grow older. Whole life insurance, sometimes referred to as permanent insurance, provides life-long protection but at a higher initial premium than term life insurance. Along with a cash benefit upon death, whole life insurance accumulates cash value over time.
Is term life insurance or whole life insurance right for me?
It depends. The lower premium of term life insurance is attractive. However, if you want coverage for a period that extends beyond the original policy length, you will need to re-qualify in order to purchase a new policy. This will likely mean a higher premium as you grow older. A combination of term and whole life insurance is often the right answer.
Essex Insurance Brokers can help you determine the right type and limit of life insurance.
Call us at (847) 954-2222 or email us at [email protected].