What Are The Risks of Living Without Life Insurance?
Although it is not required in the US, many financial advisors recommend including life insurance in your financial plans. But if you struggle to make ends meet, is getting life insurance really worth it?
In reality, life insurance is designed to protect those who rely on income. It will provide some financial reassurance to the policyholder's family and loved ones in the event of his death. Hence, acquiring a life insurance policy will grant you peace of mind, knowing that your family members will receive a lump sum to pay for urgent expenses.
However, many people still go without it. In addition, a 2021 survey found that nearly half of Americans lacked life insurance. The very first reason for not acquiring a life insurance policy is the price: Americans assume it is expensive. At the same time, it should be noted that the picture is changing year by year with the existence of online insurance companies that provide the same quality at significantly lower prices.
Advantages of Having Life Insurance
Financial planners bring three main reasons why you need life insurance. According to them, a life insurance policy is essential when you have a mortgage, children, and a partner who relies on your income. Having bought a life insurance policy, you may rest assured that your loved ones are protected, do not have the risk of being uprooted or forced to move home, and will have enough money to cover expenses such as food, shelter, and education.
In addition to the aforementioned primary benefits of life insurance, the policy also provides a number of additional advantages that are to be highlighted. Here are the principal benefits of purchasing a life insurance policy:
- The money received from a life insurance payout isn't treated as income for tax purposes, so your beneficiaries don't have to disclose it on their tax returns.
- If you have a life insurance policy, your beneficiaries won't need to use their own funds or credit to cover your funeral costs. Instead, they can utilize the money to cover these expenses.
- Your beneficiaries may also be able to utilize the funds to settle debts like unpaid credit card balances or an outstanding auto loan with your life insurance policy after your death.
- Life insurance offers retirement plans that let you maintain your confidence, earn a pension, and live your life on your own terms.
We may now presume that life insurance can guarantee that your loved ones can make ends meet in the event of your passing, regardless of your income level.
Life Without Life Insurance
Even though many Americans recognize the value of investing in a life insurance plan, many are unable to identify when is the ideal time to get a policy because purchasing a life insurance plan always comes last on their list of priorities.
Let's now talk about the primary, unavoidable consequences of not having sufficient life insurance coverage, and you might decide to prioritize your financial strategy by considering obtaining life insurance one of the most crucial options.
Leaving Your Family Members Unprotected
Keep in mind that you don't invest in your life insurance for yourself. You make investments for your loved ones even after you are gone. Let's bring some examples of what can happen to your surviving family members if you don't have life insurance:
- Funeral expenses might need to be covered out of pocket.
- Your family might have to deal with debt after you.
- The family might hardly make both ends meet.
- The cost of children's college tuition may not be affordable.
Therefore, purchasing life insurance is the best approach to prevent your dependents from having to shoulder a heavy burden of debt after your passing.
Being Reliant on Others in Old Age
You should start saving for retirement as soon as you possibly can if you don't want to feel like a heavy responsibility to your children. A permanent or cash-value life insurance policy is funded over time as part of a life insurance retirement plan in order to accumulate a sizable cash value by the time you reach retirement. Investment in a retirement plan is important since it will cover all of your financial requirements after you retire. Your family members will get the death benefit in the event of your passing, which will provide them financial security.
Having More Tax Burdens
Did you know the more insurance policies you hold, the less taxes you pay? You pay taxes to the government each month out of the income you work so hard to obtain. You can now choose from a variety of life insurance policy options that can reduce your taxable income and enable you to pay less in income taxes.
More Expensive Life Insurance Premiums
If you purchase life insurance for the first time at an older age, your premiums will be higher. When you delay buying life insurance coverage until your old age it is evident for the insurers that you are experiencing some challenges in your life that can now cause death. Because of this, the rates they provide are significantly greater for you than for others who have been purchasing life insurance for a long time. Besides, as you get older, it's likely that you'll have a number of health problems that make you much riskier for the insurance companies or even ineligible for coverage.
Having Peace of Mind
It's likely that you're about to purchase life insurance coverage as you took the time to read this article. So, don’t let a day pass without life insurance coverage because the future is always unpredictable. Hence, we advise you to look at life and everything it brings your way with more peace of mind with the help of life insurance. If something were to happen to you, life insurance would ensure that your family would be taken care of. Thus, let's minimize the risks of living without life insurance outlined in this article and live a more peaceful life.