John Shook | Liberty Mutual Insurance

There are many reasons that a person might want to have their life insured. In a recent study, LIMRA ranked the top ten reasons for life insurance.^[1] Of course, each reason will not apply to everyone, so it is important to understand the components that might motivate you or your loved one to get life insurance.

1. Income replacement

Life insurance can step in to pay the bills when the income of the insured is lost due to death.

2. Burial and other final expenses

The death of a loved one is hard enough without worrying about how to pay for funeral costs, which can be well over $10,000. (Source: Funeral Trade Commission)

3. Mortgage protection

A family could lose their home if life insurance isn’t there to step in and pay the mortgage.

4. Lock in low premium at a young age

The best time to buy life insurance is today. As people age, premium rates increase.

5. Transfer wealth to family

People can leave more behind for their family through a life insurance policy.

6. As a tax-advantaged way to save/invest

Policy owners can realize tax advantages by saving with policies that have a cash value.

7. To provide funds for college education

College is expensive and life insurance can ensure that college loans are paid for if the parents aren’t there to help.

8. To replace another life insurance policy

Needs change throughout life and customers may look for a different policy type or lower prices to suit their needs.

9. To supplement employer-provided life insurance policy

Employer-provided life insurance alone may not be adequate to cover a customer’s needs.

10. To pay estate taxes and create estate liquidity

When an estate is inherited, there are estate taxes that must be paid. Life insurance can step in to cover the cost.

As you can see, the reasons for life insurance vary widely, and will correspondingly vary from person to person, depending on your situation and circumstances. Perhaps you could use some help in determining why life insurance would be a good option for you. Becoming familiar with the top reasons people carry life insurance will give you the knowledge that is key to guiding you and your family toward a more secure future.

At Legacy Life Strategies, we offer counsel regarding this matter and similar decisions. Feel free to reach out to us if you’d like to have a conversation and evaluate the best choice for your unique needs.

^[1] LIMRA (2012). Understanding Life Insurance Buyers and Non-buyers.

Share this post: on Twitter on Facebook on Google+