Life Insurance Buyer’s Guide

Life Insurance Buyers Guide

Life Insurance, you hear commercials for it all the time but have you ever stopped for a moment to consider what they’re actually talking about? Life Insurance is an extremely important financial tool that doesn't get discussed nearly enough. That’s why the team here at Term Shop want to share the importance of life insurance with you; its application and how it can benefit you now and your families for generations to come.

What is Life Insurance?

A life insurance policy is a contract between an owner and an insurance carrier that guarantees a death benefit in the event of the owner’s death. In the event the insured individual dies during the contract period, the insured’s designated beneficiary will receive a check, tax free, from the insurance company representing the death benefit, equal to, in most circumstances, the face amount of the life insurance policy. Life insurance is an integral tool in any financial portfolio, but more plainly it should be considered an integral tool to anyone’s life. Life insurance can provide financial security for your family and love ones by ensuring the funds necessary for them to continue on in your absence and allowing them to maintain the style of life they are accustomed too.

Why the need for Life Insurance?

According to a 2022 article by the Motley Fool, the average American has about $60,000 in savings. Although this is a nice safety cushion to fall back on, how long would this amount of money last when the primary bread-earner’s salary isn’t there anymore? Two children and a surviving spouse most likely exhaust the majority of this sum within a year on living expenses alone, now leaving them in a precarious financial situation. This is when life insurance comes in. If a life insurance policy was in place at the time of death, the surviving family members would receive a death benefit which would ensure their financial well being for the foreseeable future.

When do you need to buy life insurance?

At the end of the day that can be a personal preference and depends on the rest of your financial situation. However, common consensus holds a few life events as moments where life insurance should be purchased. Those events and situations are as follows.

Do you have children?

If you have kids you, you need life insurance. It goes without saying we all want the best for our kids. We work hard everyday to earn a paycheck and afford the best we can for them. What then happens, if due to death or disability you are unable to work and earn a paycheck? Who will take care of them in your absence and where will they get the money they need to survive?

Food, clothes, diapers, health care, living expenses, school supplies, etc. Parents know the list of expenses is never ending. By purchasing life insurance we can ensure our kids receive all the money they need to live a fruitful life in your absence.

Are your Married?

Getting married is another life event the goes hand in hand with purchasing life insurance.

Do you have school loans, credit card balances, a car payment or a mortgage with a cosigner?

Chances are you have one of the above types of debt and if you have a cosigner on any one of those loans, that cosigner could be responsible for the entire sum in the event of your death. Even without a cosignor, your debt may pass to your heirs creating a potentially debilitating financial burden for the next generation. You can protect your financial obligations by purchasing life insurance. In the event of your death, a death benefit will be distributed to your beneficiary or beneficiaries who can use the proceeds to satisfy any outstanding notes and to help with final expenses.

Final Expenses

Death will always create difficult and emotional times for the family, friends and loved ones of the deceased. Navigating such trying times while maintaining our every day schedules is extremely difficult and taxing. When family comes together after a death to arrange the funeral programs and to assist in settling the deceased’s estate, this trying and emotional time can be exacerbated when the surviving family realizes the deceased hasn’t left any money to assist with the often expensive end-of-life procedures. The average cost of a funeral in the U.S. is nearing $10,000 currently, and this is just the minimum. That doesn’t include receptions and memorials which may be held and it certainly doesn’t include the financial obligations often required to move the deceased’s belongings from their home, selling the items, disposing of the items, selling the home and other personal properties. This also doesn’t include any outstanding debt or financial obligations the deceased may have inadvertently passed on to their surviving spouses or heirs. It also does not include the millionaires tax if the deceased was a wealthy individual with a high net worth. One might incorrectly think funds to cover end-of-life expenses will naturally be available from the deceased’s estate. This unfortunately is not always the case, especially when an unexpected estate tax bill is received upon the deceased’s passing.

Benjamin Franklin is attributed to the following quote, “A policy of life insurance is the cheapest and safest mode of making a certain provision for one’s family.” Franklin is also known for the following quote which most of us are quite familiar with, “The only certain things in life are death and taxes!” We know our families will benefit greatly from life insurance, we also know when we die there will be significant expenses to be paid. We are then left with the question why doesn’t everybody die with life insurance? In our opinion it comes down to education. Too few people understand the importance of life insurance and the generational impacts life insurance can provide to the surviving family and the often debilitating financial consequences of dying without. That is why it is our mission here at Term Shop to help the public understand the importance and significance of addressing life insurance and making sure your family is protected.

Visit www.term-shop.com today for free quotes and to apply online. In some circumstances applicants may be eligible for same-day coverage.