Life insurance can be essential for protecting your family financially in case of a tragedy, but many people go without it. In fact, nearly half of American do not have life insurance, according to a 2021 survey.1 One reason is that people assume life insurance is too expensive.
1. Life Insurance Payouts Are Tax-Free
If you have a life insurance policy and die while your coverage is in effect, your beneficiaries will receive a lump sum death benefit.
2. Your Dependents Won’t Have to Worry About Living Expenses:
Many experts recommend having life insurance that’s equal to seven to 10 times your annual income. If you have a policy (or policies) of that size, the people who depend on your income shouldn’t have to worry about their living expenses or other major costs.
3. Life Insurance Can Cover Final Expenses:
The national median cost of a funeral that included a viewing and a burial was $7,848 as of 2021. Because many Americans do not have enough savings to cover even a $400 emergency expense, having to pay for a funeral can be a substantial financial burden.
4. You Can Get Coverage for Chronic and Terminal Illnesses:
Many life insurance companies offer endorsements, also known as riders, that you can add to your policy to enhance or adjust your coverage. An accelerated benefits rider allows you to access some or all of your death benefit under certain circumstances.
5. Policies Can Supplement Your Retirement Savings:
If you purchase a whole, universal, or variable life insurance policy, it can accumulate cash value in addition to providing death benefits. As the cash value builds up over time, you can use it to cover expenses, such as buying a car or making a down payment on a home.
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