Life insurance can help protect a plan. Here are five reasons to include life insurance in a financial plan for anyone who hasn’t yet found the right life insurance policy.
Offer peace of mind
A financial plan is a roadmap used to help you achieve your goals in life. The integration of a life insurance contract into a financial plan provides peace of mind to all parties concerned: the insured and the loved ones who would benefit from it. This peace of mind can provide the confidence to move forward with financial choices knowing that they are in line with a larger vision.
After a person dies, life insurance proceeds can replace that person’s income. Especially if someone is the primary breadwinner, income replacement is a huge benefit of the right life insurance policy. But it’s just as essential to have life insurance for someone who takes on key tasks in the household, like childcare, that would require money if they were no longer handled at home.
Take care of final expenses
After a person dies, there are certain things to pay, such as funeral expenses or property taxes, which are considered in the category of final expenses. The right life insurance policy can help pay for these final expenses, which means loved ones are free to use their inheritance for other purposes.
Settle outstanding debts
For many households, the biggest expense is the mortgage. But without the income of one spouse, the family may not be able to make ends meet. With an appropriately sized term life insurance policy, a surviving spouse can worry-free about paying off lingering debts, such as a mortgage or business loan.
Fund College expenses
For parents, there is probably a line item in the financial plan for child-rearing expenses. But that plan could change drastically if the family loses a parent’s income. Life insurance can help bridge this gap if the death benefit is sufficient to cover the cost of education.
The general recommendation for paying out a death benefit on life insurance is 10 to 12 times income. But families with many children may need to increase the amount if the goal is to use the policy to cover education expenses.
Any well-rounded financial plan should include life insurance. Reasons like giving peace of mind to loved ones and providing income replacement and other financial support top the list of why it is necessary to have life insurance in the plan. Taking the time to find and obtain the right life insurance policy today means that long-term financial plans are protected if life offers the unexpected.
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