Having a life insurance policy is the simplest way in which a breadwinner can ensure that their dependents’ future would be taken care of in the long run. Here are a few key reasons that make getting life insurance an important responsibility for everyone.
It helps replace lost income
Most life insurance policyholders are also the breadwinners for their families. In case something happens to them, their life insurance policy would provide some amount of compensation for the income for the household that was lost with the death of the policyholder.
It helps pay off the deceased’s debts
In the course of routine life, one tends to have some form of debt on them. The liability to pay off these debts falls on their family. If the deceased had taken out a life insurance policy, these debts would be cleared using that fund.
It acts like an emergency fund
In case a life insurance policy holder dies during a financially weak time for their family (like when they have a huge mortgage on the house or are halfway through the payment of another asset), the payment that their family receives can be used as an emergency fund to cover these expenses.
It can be used to cover funeral or medical expenses after death
If a person has passed away after a long illness, their life insurance payout can be used to cover the medical expenses incurred during their treatment. Sometimes, dependents of the deceased also use the payment received from the life insurance policy to cover the expenses of the funeral.
It is a fund for one’s dependents
Life insurance benefits help the deceased’s family acquire a lump sum of one’s life savings which can be used to for the education of kids, their weddings, etc. it helps the surviving family of the deceased stay financially strong after the loss of an earning member of the family.