Do you have life insurance? There is a reluctance to talk about buying life insurance because it is not a cool subject like buying a house, a nice car or a big TV. But did you know you know that a house, nice car and big TV are very much connected to life insurance?
Yes, that’s correct.
If you don’t have life insurance, don’t assume you or your family will have that nice house for ever. Don’t assume your group life insurance through your Group Benefits will be enough to take care of your family. If someone dies, you can pretty much assume that this house may not be around for too long – especially in this economy.
What am I talking about? Pull up a chair.
Why Have Life Insurance?
Life insurance is a lump-sum payout in the case of unexpected death, or even an expected future death like old age. In this universe, death, like the speed of light, is a constant. Also in this universe (and this economy) the minute someone dies, especially a wage earner, they tend to leave behind debts. It could be small debts or large debts, but debts anyway that have to be paid. People think, why should I care if I’m dead? Sorry, fantasy! Your Estate will be charged and/or your family and loved ones can end up being stuck with the bill. If you have kids, why would you do that to them?
People also assume that when someone dies there is some kind of inheritance. Fantasy number two! Even wealthy people, when they die, will leave behind some debts. Everyone has bills to pay, and contrary to popular opinion, those bills do have to be paid. Creditors seem to appear out of nowhere, right after that funeral.
And by the way, if there is wealth and inheritance, don’t assume there are no taxes involved. You’ve heard that term “death and taxes?” The type and amount of taxes that your Estate has to pay will vary depending on where you lived and died, but the taxes need to be paid.
Support For Your Family
Your Estate will be responsible for all your bills and taxes, and the wealthier you are, the higher the bills and the taxes. What is your Estate? It is all the assets that you owned. That could be your home, car, saving accounts and any other valuables. Your bank account will be emptied to pay taxes and bills and other assets will be sold, again to satisfy creditors. Maybe you want to leave some cash for your kids? Nope, they might be last in line. Your family will need money to maintain their lifestyle, but if there is no life insurance, they will be scrambling. The bills have to be paid and the creditors will show up demanding payment or they will repossess and foreclose. Whether you have outstanding medical bills or even parking tickets, yes all of those have to be finalized.
However, the very first bill you have to pay is the funeral or burial – also known as “final expenses”.Funeral companies want their money now, not later.
Pay Your Mortgage (From the ‘Other Side’)
Second thing that happens is that the rent or mortgage is due. I haven’t met too many landlords or banks that feel bad and say “oh dear, sorry for your loss, go ahead and miss a payment or two.” They don’t. They expect the rent or mortgage to be paid or get out. Foreclosures happen all the time.
Here is how it works, if you die unexpectedly, you are no longer working, so there is no more income, but family will still be stuck with the rent or mortgage, the bills, and the funeral expenses. It can be a financial catastrophe.
If you care about your family, ask yourself, “what if something unforeseen happens to me, who will pay the bills?” What will happen to your spouse, kids, dog, grandma, grandpa who depend on you? No one else will cover those expenses. You are still responsible.
Life Insurance Provides For Your Loved Ones
How does life insurance work? Life insurance is a financial asset. When claimed, a life insurance payout is a one-time lump sum assigned to your Estate or whatever beneficiary you chose. It is not considered taxable income. This insurance payout can be used to pay the bills so your loved ones won’t face financial disruption on top of all the other grief that happens when there is an unexpected death.
You buy life insurance to protect your loved ones, family, and home. You buy life insurance because you are still the breadwinner, and because life coverage through group insurance from your work may not be enough. It is not that expensive considering you are buying peace of mind. Yes, you pay monthly (or annual) premiums, but not having life insurance can be financially catastrophic for your loved ones and family. You get life insurance because you love them, because you’re responsible, because you’re still there in spirit. Life is risky, but you can take control of that risk and look after everybody. You buy life insurance because you care about the future and your loved ones will thank you for it.