Life insurance is a financial instrument that most everyone will have a need for at one time or another to help cover financial obligations in the event of their demise. Some will also need it for estate purposes. What circumstances might require an individual to purchase life insurance? Depending on age, personal obligations, and financial situation here is a list of the most common reasons life insurance should be purchased.
- Income Replacement – If, in the unfortunate death of you or your spouse, the family’s income will be severely reduced or eliminated? Purchasing life insurance to replace this loss of income for a period of time would be necessary.
- Financial Obligations – During our lives we often incur temporary financial obligations. Home mortgage, student loans, tax settlements, or other payments that will live on if you die prior to fulfilling the obligation.
- Estate Planning – Often individuals wish to leave their heirs an estate after they are gone. Life insurance is the quickest and easiest way to build such an estate. Life insurance can also be purchased to cover inheritance tax on larger estates or to provide some liquidity in executing the estate.
- Business Interest – Life insurance is often purchased to ensure a business continues uninterrupted in the event an owner or partner passes away.
- Burial & Final Expense – Life insurance can be purchased in smaller amounts to cover any costs associated with your final wishes. Often these expenses can surpass $10,000 and can be a serious burden on your family.
Types of Life Insurance