When creating a financial plan, individuals need to make certain life insurance is part of their overall strategy. The funds obtained from this policy may be used for a variety of purposes, such as paying off a mortgage or to cover final expenses. Term life insurance is one option to consider, as obtaining this type of protection is something that should never be delayed. In fact, purchasing a policy at a young age helps to keep premiums low. 

Term Life Insurance

What exactly is term life insurance? This policy covers the buyer for a specific time period, often 10, 15, 20, or 30 years. If the individual passes away during the time period, the beneficiary receives the death benefit listed in the policy, and the payment is provided as a lump sum. When the individual remains alive throughout the time specified in the policy, he or she will either need to purchase a new policy or renew the current one to provide for beneficiaries at the time of his or her death. What expenses may be covered by a policy of this type?

End-of-Life Expenses

End-of-life expenses become the burden of family members or loved ones in the event a person does not have the funds set aside for this purpose when they pass away. For this reason, many people choose a term life policy that covers their funeral, burial, and/or cremation expenses to ensure the funds are available and this does not fall to someone else. Furthermore, most policies of this type now include an accelerated death benefit rider. In the event the policyholder is diagnosed with a terminal illness, he or she may access part of the death benefit to use for medical and other expenses if he or she is unable to work.

Regular Bills

When a person passes away, his or her spouse or partner becomes responsible for all of the household bills and other regular expenses. How will these bills be paid if one person is no longer contributing income? A life insurance policy can be of great help in covering these expenses when or if the emergency savings runs out. This is of great importance when only one person generates income in a relationship.

Mortgage

A home provides more than shelter for a family. It also serves as an asset and provides a family with financial stability. In the event one party dies, the life insurance policy may be used to cover this regular expense or pay the house off in full. This allows those left behind to make decisions with their best interests in mind rather than their finances.

Debt

Families tend to accumulate debt. What happens when one of the cosigners on this debt passes away? Will the other responsible party be able to pay on the debt as agreed or will it go into default? This is something every person needs to consider when taking on new debt of any type. While student loans are forgiven in the event the borrower passes away, most other debt remains valid, and a term life insurance policy can be of great help in clearing this debt. This not only provides the loved one with a more secure financial future but also protects his or her credit score as well.

Stay-at-Home Parents

Countless mothers and numerous fathers now choose to stay home with their children as opposed to working outside of the home. Purchasing a life insurance policy in a sufficient amount will allow them to continue to do so until the children reach adulthood. Keep this in mind when buying a policy and make certain the funds are enough to allow them to do this. Continuity in the life of a child who has lost a loved one is of great importance. The policy ensures they continue to receive the same care they are familiar with so their grieving isn’t compounded by a change in their normal routine.

Dependent Expenses

When both parents work outside of the home, care must be obtained for young children or any other dependents of the couple. Will this care still be accessible in the event one partner passes away? A term life insurance policy can ensure it is and won’t create a financial hardship for the partner left behind. When determining how much should be set aside for this purpose, take into account the age of the dependents, an estimated time frame for how much longer the care will be needed, and the cost of this care. Be sure to take into account rises in the cost of living to make certain the loved ones have funds for this purpose in the future.

Consider the above when determining if a term life insurance policy is the right choice for you. Countless individuals find this is the best way to protect their loved ones in the event of their demise. You may find the same to be true for you. However, make certain some type of protection is in place, even if it is not a term life policy. You don’t want your loved ones to be burdened with financial problems when grieving.

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