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HomeBlogHow Insurance Can Help You Prepare for Financial Emergencies

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Many believe that they only need life insurance protection while they are raising a family. While it is prudent to have life insurance in place when you have dependents, it is also imperative to utilize life insurance planning for other circumstances throughout your life. Here are some other considerations on why life insurance can better prepare you and your loved ones for financial emergencies.

  • Income Replacement – You and your significant other may have planned on two incomes for your future life together. If one of you unexpectedly passes, how will your significant other make ends meet? Thinking about how drastically your loved one’s life may change if adequate savings are not in place is very worrisome. Life insurance can be used to help replace the lost income so that the survivor can maintain the same standard of living.
  • Covering Financial Debts and Obligations – At any given point, many people have mortgages, student loans and other outstanding debts. In fact, it is quite common to see retirees with some or all of these expenses. By having life insurance in place on each spouse or partner, it may enable a surviving loved one to continue to satisfy the family’s financial obligations without taking on any undo monetary stress and depleting savings and retirement assets prematurely.
  • Final Expenses – Funeral expenses, burial costs and medical expenses are items that many people avoid speaking about. However, the truth is that these are all expenses that our surviving loved ones are forced to address after we pass. Having those closest to us pay directly for these items can add more stress and financial hardship to an already difficult and emotional time. Life insurance can help lessen this burden and provide a way to settle the final expenses. Many life insurance policies allow for assignment to funeral homes to cover the costs. The expenses are taken directly from the life insurance proceeds. The remaining life insurance is paid out to the beneficiary or beneficiaries.
  • Financial Support for Others – Many people have aging parents, adult disabled children or others in their lives who they help support financially. If you were to pass unexpectedly, would those who you assist financially be able to continue living their lives or would their standard of living deteriorate? Having a life insurance policy in place that would provide benefits to these individuals may continue to keep them in a position where they would remain financially secure and receive the care that they need and are accustomed to receiving.
  • Inheritance – A majority of people today do not have pension plans that provide a stream of income to them after they retire. With a growing number of people in qualified retirement plans such as 401k and 403b plans, the onus is on the individual to save for their own retirement needs. The result is retirees spending down their retirement assets and personal savings. Despite intentions of leaving assets to their heirs, in many situations, retirees have depleted their assets significantly to cover their retirement living expenses, leaving little to pass on. Having a life insurance policy in place ultimately ensures that there will be an inheritance in place for those that you have designated as beneficiaries. Perhaps the greatest feature of life insurance is that it is typically paid tax free in one lump sum to the beneficiaries.

Life insurance can help fill a variety of needs well beyond just covering an individual during the years of raising a family. There are many different types of insurance policies and some are more appropriate than others for specific goals and needs. Talk to your financial advisor and/or insurance professional with questions that you may have. If you feel that you are not receiving this type of guidance or advice from your advisor, please give us a call for a no–obligation consultation.

If you or a family member encountered a sudden situation that posed  immediate risk,
would you be ready and able to take the appropriate course of action?

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