If you find that you do not need coverage in your lifetime, you could end up paying unnecessarily high premiums. Depending on how much coverage you need and how old you were when you applied, you could be paying only $20 per month in life insurance premiums for a term life insurance policy. Even if your policy ends up paying out a death benefit, premiums may still be steep. A life insurance policy could provide peace of mind that a loved one will be able to carry on with financial obligations like child care using the death benefit paid after you pass away.
The death benefit of a life insurance policy can help provide funds your family might need to help cover housing costs. At a time when your loved ones are already dealing with the loss you have caused, life insurance could help alleviate some of the financial burdens they might face following your passing. It can be extremely hard to sell your house quickly if you need money, and a life insurance policy could help your loved ones with their mortgage payments should they choose to remain in the house.
If you are helping an elderly parent, or you are planning on doing so one day, a life insurance policy ensures that he or she will have some funds left over for long-term care or personal expenses should you be unable to provide for them anymore. Hopefully, your dependents will never need to file for your life insurance, but if you should pass away while the policy is active, you can take comfort in knowing that their essential expenses, mortgage payments, and educational expenses will be covered. If you have loved ones who rely on you financially--or you have debts that will be a burden for your family should you pass away--life insurance is probably a good idea. If you died suddenly, and your death leaves significant people in your life responsible for the debt, or without a way to pay the bills, or burdened by costly expenses, life insurance may make sense for you.
Permanent life insurance also could be part of a tax-deferred financial strategy, designed to avoid paying taxes on savings until you are in a lower tax bracket, presumably by the time you retire. The growth is similar to the tax benefits that you receive from some retirement accounts, including IRAs, 401(k)s, and 403(b)s. If you are maxing out contributions to some retirement accounts year after year, investing in permanent life insurance for tax reasons can make sense.
Whole life is the most expensive type of permanent insurance, but the people who opt for whole life usually do so for the money-back benefits built into the entire policy. Buy This is why term policies may be better than whole lives: Because they cover only the time that you really need life insurance due to your financial obligations. Even if you have already started contributing to a 529 college savings plan, a death benefit from your life insurance policy could provide extra cash to help pay for your child's education should you pass away.
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