Insurance

Top 3 Reasons to Get Life Insurance

By  Derek Condon

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There are a lot of really good reasons to get life insurance. I’ve been in the financial industry for about a year and a half now, and have seen a lot of things from my clients. But even though there’s a lot of reasons to get life insurance, there are a few very common ones. They are:

  • Starting a family
  • Buying a home
  • Financial planning

Let’s take a closer look at the top three reasons I find people search for life insurance, and why those are important times to reassess your insurance needs.

Starting a Family

When you have dependents, people who rely on you to earn an income so they can survive, you need to ensure they will always be okay. If anything were to happen to you, life insurance can pay a tax-free benefit to your family. This benefit can be used for all sorts of things like replacing income, paying down debt, putting money towards the future, funeral expenses, and anything else really.

I believe it’s important to put your loved ones in a position where they can succeed, and have every opportunity in the world. If they were to lose a loved one, that is hard enough. If on top of that, they need to worry about how they are going to pay the bills or have to consider selling the house because they can’t afford it, well, that makes things even tougher.

I see people getting life insurance in place to help protect their family and their loved ones. I really hope that none of my clients’ policies ever do have to be paid out, but I know if they do it will go along way for their families.

Buying a Home

Buying a house is a really exciting moment. It can be the start of a new personal journey, and definitely the start of a new financial journey—a mortgage.

For almost everyone, their rent or mortgage is their biggest financial responsibility. Your living expenses take up a lot of your budget. Making sure you have insurance in place to eliminate that debt if you can’t pay it is really important. If not, your spouse could inherit an entire mortgage (where maybe they had to pay for only half of it), or your beneficiary (who may not live with you) could inherit it. I don’t know many people who could just take on an additional mortgage payment just for fun.

When you get a mortgage, your lender will most likely offer you creditor life insurance, but that’s not often your best bet. Creditor life insurance costs the same every month, but only covers your mortgage balance. As you pay off your mortgage, your benefit actually decreases, even though your monthly bill doesn’t.

Financial Planning

When people are in a position that they’re thinking about their future and planning for it, there’s a lot of things we can look at. There’s a lot of parts that come together to complete a plan. Just like making a pizza. Let’s look at a financial plan as a pizza, and let’s say that the insurance aspect of it, is the sauce. Pizza without sauce isn’t great, and pizza made only of sauce, well, that’s just awful.

As we are beginning to build wealth and put ourselves in an advantageous position, it’s good to make sure we have a backup plan. Getting insurance in place helps make sure that we have insurance in the future — there are things that can happen that would make someone uninsurable, and put their wealth at risk. It also allows us to protect our present loved ones, as well as our future loved ones.

Getting insurance to complete a financial plan often happens with young professionals or established professionals with growing families. But it’s always a good thing to keep in mind and review annually. It’s never too soon to have a great insurance plan.

There’s a famous quote in the investing world, that says ‘the best time to start investing is when you’re young, the second-best time is right now’ — and I’d say the same about insurance. Insurance is cheapest when you’re younger, and it’s less complicated. No matter how healthy you are now, that can change, so there’s no better time to reassess then now.

Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.

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