Most financial plans would not be complete if they did not include life insurance. Without it, many families would face financial ruin if the primary breadwinner were to pass away unexpectedly.
Life insurance can prove to be vital in the following scenarios:
- Replacement income for dependents left behind. From your spouse to your children or other dependants, this replacement income will help those who need it most.
- Funeral and burial costs can be covered by life insurance. In addition, other costs such as probate and other estate related administrative costs can be covered by life insurance as well.
- Inheritance for heirs by providing them with sizable lump sums of money to create in some instances generational wealth.
- Payoff of federal and state "death" taxes that would otherwise be paid by liquidated assets.
- Charitable contributions to your favorite charities.
In many cases, life insurance can also benefit you while you are still living. You have an option to use the cash value of your policy, which can be borrowed against when you need it. There is also tax advantages associated with deferment as well.
How Much Insurance Do You Need
Most financial planners will advise that you have enough insurance to cover all of your living expenses and current debt. However, more recently, the general consensus is to asses how much you need and then double that amount. This way, there is money left over after all bills are paid.