You’re thinking about buying some life insurance (or, as some affectionately call it, death insurance, since it typically pays on death, not life). Maybe you already have a policy in place and are wondering if it makes sense to keep it.
Here is a list of the top five reasons why you should have life insurance, even if your kids are grown and you’re lucky enough to have paid off your mortgage.
1. To cover your funeral expenses
Since we can accept that you are going to die at some point, and unless something unimaginable occurs, your body will be left. Most folks like to do something with said body. Have a major event where people can come and (hopefully) say great things about you, attend your burial and then eat some food.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.
Maybe you’ve requested that your loved ones sprinkle your ashes at the Pirates of the Caribbean ride at Disneyland. Yes, that happens more often than you would imagine. (It's also illegal, according to California law, unless you obtain written permission from the property owner.)
Regardless, all of these things cost money. For bare-bones funeral expenses — excuse the pun — you could be looking at close to ten grand! Your loved ones receiving your life insurance payout would help cover those costs.
2. To pay off your debts
Most people spend more money than they earn. A sad but true fact. When you pass away, that debt remains, and somebody will be expected to pay off your credit card balances and the personal loan you got from Uncle Arnie. Although Arnie may waive it, you don’t want to count on that.
How nice would it be to know that after you take your last breath, all the companies who lent you money and people who were kind enough to entrust you with their hard-earned buckies will get paid back without burdening anyone?
3. To help support those you leave behind
Unless you’re a freeloader extraordinaire, you and your partner both earn money and contribute to the expenses of the household. We call that a two-income family. Let’s do some simple math. Two incomes mean that each person is bringing in the bacon — maybe the ham — but there is money coming in from both people.
Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.
Take one of them away, and you’re left with a one-income family that still has potentially the same expenses. Your life insurance could ensure that they aren’t booted to the curb by the landlord or the mortgage company when they can afford to pay only half of the rent/mortgage.
4. To settle your tax bill
Yeah, I went there. You know the old saying, Nothing is certain in life except death and taxes. After you die, your final tax bill will come due.
I’m not a CPA — unless CPA stands for Caffeine-Powered Animal. Be that as it may, when the taxman comes to collect, wouldn’t it be nice if your loved ones didn’t have to sell off their stuff to pay taxes that you owe?
Let me help you with that: The answer is yes, that would be very nice. Life insurance provides money to pay those taxes.
5. To leave something charity
Do you care about something in particular? Maybe you go to church or synagogue? Maybe you’d like to support the American Red Cross or a local rescue mission?
How cool would it be to be able to leave a parting gift in the form of a bag of money? Who knows? You may even get your name on a wall as an infamous donor.
Listen, life insurance isn’t about you. It’s about the people you leave behind when you shuffle off this mortal coil. No doubt, there are good uses for your life insurance once you’re gone.
With very little effort, you can choose the right person or organization to receive your life insurance proceeds — and make everyone better for it.
Want to learn more about insurance? Visit KarlSusman.com.
Related Content
- When Is the Perfect Time to Buy Life Insurance?
- What Is Insurance Good For? Let Us Count the Ways
- I'm an Insurance Expert: This Is How You Get the Right Insurance Coverage at the Right Price
- Four Reasons It May Be Time to Shop for New Insurance
- How to Balance Your Insurance Expectations vs the Reality
-
I'm a Financial Pro: This Is How You Can Guide Your Heirs Through the Great Wealth TransferFocus on creating a clear estate plan, communicating your wishes early to avoid family conflict, leaving an ethical will with your values and wisdom and preparing them practically and emotionally.
-
To Reap the Full Benefits of Tax-Loss Harvesting, Consider This Investment Strategist's StepsTax-loss harvesting can offer more advantages for investors than tax relief. Over the long term, it can potentially help you maintain a robust portfolio and build wealth.
-
How Prepaid Verizon Phone Service Works and When It's a Smart ChoiceExplore the differences between Verizon Prepaid and Verizon Postpaid plans—costs, perks, flexibility, and when going prepaid makes sense.
-
Child-Free Cruises Perfect For Your Retirement CelebrationHow to find a bespoke ocean or river vacation for adults. Many of these options are smaller, charming river cruises, expeditions, or niche experiences.
-
My First $1 Million: Biopharmaceutical Senior Manager, 45, MassachusettsEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
Social Security Wisdom From a Financial Adviser Receiving Benefits HimselfYou don't know what you don't know, and with Social Security, that can be a costly problem for retirees — one that can last a lifetime.
-
Take It From a Tax Expert: The True Measure of Your Retirement Readiness Isn't the Size of Your Nest EggA sizable nest egg is a good start, but your plan should include two to five years of basic expenses in conservative, liquid accounts as a buffer against market volatility, inflation and taxes.
-
Dow Adds 472 Points After September CPI: Stock Market TodayIBM and Advanced Micro Devices created tailwinds for the main indexes after scoring a major quantum-computing win.
