“Be grateful for today, because we aren’t guaranteed tomorrow.” Though this quote can be quite saddening, this statement speaks great truth. This is such a great piece of advice to follow, because your future death not only affects you; it affects everyone who knows you. It’ll affect your high school classmates from your youth. It will affect your college roommates and co-workers, your mentors and friends. Most of all, your death will deeply impact your family.
Because of this, it’s important to financially plan for not only your future, but your family’s future. If you were gone tomorrow, what would happen to them? Would they be able to afford living expenses? Would they have enough money to pay for your funeral, which costs, on average, around $11,000.00+? After the week or two time frame that people usually bring meals to help them through the up front chaos that is losing a loved one, they are left to fend for themselves financially, which could compound their grief if they are not well prepared for this time.
This is where
life insurance
comes to the rescue.
As a woman who is passionate about helping people manage their wealth wisely, I feel as though it would be a disservice to you if I did not show you the difference between various types of life insurances and the benefits of purchasing life insurance even as a young adult.
In order to purchase the right life insurance for you, let’s break them down.
Different Types of Life Insurance
Term Life Insurance
This type of insurance, Farmer’s Insurance says, is usually good for, “temporary needs or if your funds are limited because it provides coverage for a specific period of time. [It] is generally [(1)] less expensive than permanent life insurance, [(2)] often provides the greatest amount of coverage for the lowest initial cost, [and (3)] has premiums that stay level for a set amount of time, usually 10, 20, or 30 years.”
Permanent Life Insurance
Under the umbrella that is Permanent Life Insurance, there are two subtypes, which include Whole Life Insurance and Universal Life Insurance. Farmer’s goes on to share what these two subtypes are about:
“Whole life insurance… is one of the most common types of permanent life insurance. Premiums on whole life policies are guaranteed never to increase as long as the policy remains in force; policies offer guaranteed cash value accumulation, and the policy owner may borrow against the cash value of the policy.
“Universal life insurance… allows you to tailor your insurance to meet your changing needs with flexible premiums and benefits with potential for building cash value. The policy owner may also borrow against the cash value of the policy.” (emphasis mine)
Benefits of Purchasing Life Insurance
According to the Insurance Information Institute, there are numerous benefits to purchasing life insurance, including that you can do the following:
- “Replace [your] income for [your] dependents,…
- “[Help your loved ones] pay [your] final expenses,…
- “Create an inheritance for your heirs,…
- “[Help your loved ones] pay federal ‘death’ taxes and state ‘death’ taxes [when you’re gone],…
- “Make significant charitable contributions [with your remaining or left over assets, and]…
- “Create a source of savings, [because] some types of life insurance create a cash value that, if not paid out as a death benefit, can be borrowed or withdrawn on the owner’s request.”
There are numerous reasons why you should purchase life insurance. Sometimes, life insurance can cost a simple few dollars per month. Sometimes it can be more. Regardless, it can more than help you and your loved ones when planning for the future. It can have you and your loved ones rest assured that everyone involved will be financially taken care of when you’re gone.
What drives you to purchase life insurance? Tweet me @EricaHill_KW to continue the conversation!