When people maintain a life insurance policy, they secure a degree of protection that's hard to find elsewhere. From lingering debt to funeral costs, there are numerous risks of living without protection for your family's future, and these risks are some of the most important reasons for life insurance.
Policies come in different sizes, each with its own varied nuances and specialties. But the primary importance of online life insurance is that it can help increase financial stability for your family and estate should you pass away.
To get an idea of what happens when you don't have life insurance, start by understanding the protective role of coverage.
Your family could be left with dealing with debt
When someone passes away, unpaid debt may go to the estate of the individual. While this can help protect your loved ones from that debt, it could also prevent them from getting any financial benefit from an estate.
In these situations, the funds in a life insurance policy can be drawn upon to pay that debt. If you're someone living with significant debt, this risk is a big part of why life insurance is important for you.
Thankfully, it's easy to get your cost for coverage with a fast, online quote.
Children's college tuition fees might not be available
Colleges are expensive, and a life insurance policy is one way parents can ensure their child's higher education. The idea is that if a parent passes away while their children are still young, the parent's income will be lost, and they won't be able to help with college tuition costs.
It isn't easy to consider this worst-case scenario thinking.
Still, what is the point of life insurance, if not to keep these kinds of situations from being any harder on our loved ones than they must be?
Funeral costs may have to be paid out of pocket
While it may be far off in your mind, taking care of funeral costs ahead of time can help keep the financial burden from falling to family. Specialized policies exist that allow you to make all planning and location arrangements ahead of time. Although Ethos doesn't offer funeral-specific policies, the payouts from any of our plans can be used for burial expenses (or whatever your beneficiary chooses).
No matter the policy type, life insurance can often be used to keep funeral costs from interrupting your loved one's mourning period.
Keep in mind that life insurance rates increase with age.
Family may not have enough income
If you're the primary earner in your household, a life insurance policy can help protect against a loss of income. While policy payouts may not be enough for your family to live on indefinitely, these benefits may help them meet their financial needs while they grieve. Depending on the policy size, the payout may last and serve this purpose for a long time.
Miss out on tax benefits
If your financial needs are already met, you may be wondering if you're even someone who needs life insurance. It's important to remember that many policies come with tax benefits. For starters, life insurance payouts aren't generally taxed as income. In policies with cash value components, like whole life insurance, the cash value is tax-deferred while it grows.
Not typically. If you outlive your life insurance policy, the insurance company keeps the premiums, and the payout doesn't occur.
To understand what happens if you have no life insurance, you'll need to compare your current financial situation to your future financial goals. There are ways to provide safety nets without life insurance, but they can be more expensive. Investment portfolios and retirement accounts can go a long way. The dilemma is that life insurance provides a safety net if you pass away. At the same time, other investment strategies are dependent on you continuing to pay into them.
For example, paying premiums on a term policy for only a few years could provide a robust financial safety net if you pass away during the policy. In contrast, investing in anything else for only a few years is unlikely to generate a sizable return. Hopefully, you won't need the policy, but the idea is to use life insurance to hedge against risk. After all, why buy life insurance if not to ensure a degree of financial security?
Start applying for a policy today and begin putting these risks behind you.