Simply put, life insurance gives your family or business greater peace of mind after you die. It’s money they can use to help pay the mortgage, run the household, maintain the lifestyle you’ve worked so hard to provide or help transition your business. It can also help ensure that your family or business partner won’t be burdened with debt. Without enough life insurance, assets like your home or business might have to be sold to pay outstanding bills.
If you checked one or more boxes above, you may need more life insurance.Any one of these life events can trigger the need for additional life insurance. Even if you already have some insurance, there’s a good chance you might not have enough or the right kind. And that means the people who matter most to you could suffer financially if something unexpectedly happens to you.
The importance of life insurance
While it is easy to procrastinate when it comes to buying insurance, we never know what the future holds for us. So it’s important that we have sufficient insurance in place at all times in case the unthinkable happens.
How life insurance works
When you buy a life insurance policy, regardless of the type of policy, the foundation of every life insurance policy works this way.
1. The insurance company agrees to pay your beneficiaries a specified amount of money when the insured person dies, as defined by the policy.
2. You pay for the policy by making premium payments. The premiums you pay depend on your age, gender, health and lifestyle, the kind of insurance you buy, and any extra features and riders you add to the policy.
3. Your beneficiaries generally won’t have to pay income tax on the money they receive from your insurance policy according to current IRS regulations (see IRC Section 101(a)).
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