Why You Need Life Insurance?

By Les Stephen

Life Insurance… Probably one of the most unpopular topics for anyone including a financial advisor. Although it is an uncomfortable conversation, it is an absolute foundational piece of having a healthy financial strategy. Using an analogy from an old nursery rhyme, ask yourself this, is it better to have the Golden Egg or the Goose that lays them? Your lifetime earning potential is key to your future and the future of your family. Without the Goose, the Golden Egg probably will not last and your loved ones will not only be left without you, there is a good chance their financial situation will get much worse. As the title says, I want to share just a few common reasons and circumstances where Life Insurance may be a good idea to include in your overall financial plan.

Getting married or are married

Take yourself out of the picture and think of the lifestyle you would like your spouse and children to live.

Debt

Who will be responsible for your debt including mortgage, car loans, credit card debt, etc.

Final expenses

Funerals are expensive in addition to the consideration that you may incur substantial medical bills upon your passing.

Supporting family / aging parents

In today’s society, often there are people who count on you for financial and non-financial support.

Leaving an inheritance

Life Insurance is considered an “instant estate” that can be passed to heirs upon their passing. Many people love the thought of leaving money to loved ones.

Tax treatment of life insurance

With exception to rare circumstances, proceeds from a Life Insurance policy are not taxable. Trust me on this, your beneficiaries would prefer cash proceeds from you Life Insurance than your stuff (sentimental items excluded).

Give to charity

Even if one has no direct heirs, they may wish to leave money to their favorite charity or donate to their church.

Business owners

This is a bit more advanced, but there are several uses for Life Insurance to insure the continuation of a business including Key Man and Buy-Sell arrangements. (Probably a subject of an entire blog itself.)

The old saying is “the time to get Life Insurance is when you may feel you don’t need it”. Many people realize the need after an accident or a medical scare and at that point they may not be able to qualify for coverage. Remember, there are many types of Life Insurance to fit specific needs, so I recommend consulting an experienced insurance professional. Hope this one inspires some thought and thanks for reading!

If you are looking for a financial advisor team focused on your unique financial situation, communicates openly, and that puts you and your goals at the center of the relationship, call us at (480) 507-2425 or contact us online. We’d love to meet you.

The content in this article was prepared by the article’s author. Voya Financial Advisors, Inc. does not endorse its content, and the views expressed may not necessarily reflect those held by Voya Financial Advisors, Inc.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable by having the policy approved. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications