Is Life Insurance Beneficial?


Life insurance provides you with two major benefits.  First, it protects loved ones against the financial consequences of your death.  Second, it offers living benefits. 

Everyone knows that the financial consequences of death can be overwhelming.  When a spouse, parent, child, sibling or grandparent dies, there is a great deal of emotional trauma to deal with by the surviving family members.  However, the financial consequences can be even more destructive.  If there is no life insurance in place, surviving family members are thrust into a position of extreme financial difficulty.  Not only do they have to contend with the loss of future income, but there’s also the death and burial itself.  They generate sudden and unexpected expenses.

If you look at the mortality statistics, you will see that a significant number of people die each year, long before they achieve their normal life expectancy.  If the deceased is a breadwinner in a family, that premature death can have tragic consequences, on many levels. Not only are survivors trying to deal with deep personal grief and loss, but they are also facing grave financial concerns.  They can no longer rely on that breadwinner’s salary to meet the daily living expenses.

Of course, the cost of a funeral can be heavy, but there are other expenses to consider, as well. An executor’s fees and expenditures involved with estate administration, for one.  Outstanding debts such as car loans, mortgages, credit card balances, promissory notes, medical expenses, death taxes, and federal taxes, must still be paid. 

The future security of loved ones is something else to consider. Living expenses, mortgage payments, and children to raise and educate are important considerations.  It can be an overwhelming burden, and it really does not matter what financial obligations are left behind.  There is only one thing that can resolve them, and that is money. If you want to ensure your family does not deal with the financial devastation a premature death can produce, you need to arrange life insurance to provide sufficient monies to cover their needs.

Some survivors may have a time during which it will be difficult to work, and some may have to think about a survivor’s blackout period. This is a time where social security stops paying the surviving spouse, because dependent children are no longer a factor.  These events are difficult if no monies are available.  Also, some families try to plan for a surviving spouse’s retirement needs. Because of the fact that life insurance can generate an immediate estate, at a time when it is most needed, it is a means of estate building.

Life insurance also supplies living benefits, as some types of permanent policies offer a cash benefit.  In addition to the death settlement, they accrue a cash value, and this cash value belongs to the policyholder.  Some permanent policies also permit withdrawals from the cash benefit, and these can be used for any reason the policyholder chooses.  The policyholder can also take out loans from the insurance company, by using the policy’s cash value as loan collateral. 

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