What Is Life Insurance?
Let's be honest: Life insurance is a topic that most people would rather put off for another day (or even another year). In fact, if life insurance had a spirit animal, it would probably be the elephant in the room.
At its core, life insurance is really there to help protect the people and causes that you care about most in the event of your passing. For that reason, it's best to think about obtaining it before you actually need it.
Ask yourself this important question: If you passed away tomorrow, would your loved ones be financially protected? Most Americans would likely answer "no." In fact, 57 percent of Americans surveyed would struggle to cover an unexpected $500 expense, reported CBS News, based on a Bankrate survey.1
Life insurance can act as a rainy day fund for your loved ones, should you pass away unexpectedly. It can help to cover your funeral costs and medical bills, monthly bills, and outstanding debt, such as student loans or credit card bills. If you're the primary breadwinner, life insurance can also help to provide ready money for your spouse while he or she is job-hunting. Or, if you're a stay-at-home parent, the benefit amount can help to offset the cost of childcare.
In life, there will always be rainy seasons. We may not be able to prevent the storm from coming, but we can certainly prepare for it.
If you're young and healthy, you may think to yourself: Why do I need life insurance? However, the people who buy life insurance don't do it to protect themselves. They do it to protect the people they care about most.
Look around you. Do you see a smiling face covered in applesauce sitting across from you? If so, you probably need life insurance. It's a way to financially protect those who depend on your paycheck, such as an infant or child.
For a middle-income family to raise a child born in 2015 through the age of 17, it costs $233,610, according to the latest U.S. Department of Agriculture report. The life insurance coverage you buy today could help to cover your child's financial expenses tomorrow, whether it's diapers or a diploma.
Not a parent or grandparent? You may still need life insurance. The coverage amount can also be used to help your spouse or significant other stay afloat, covering the rent or mortgage payment for the home you shared together. However, when it comes to coverage, it's important to make sure you have enough.
To estimate this number, Life Happens, a nonprofit organization that focuses on life insurance and other products, recommends asking yourself these two important questions:
Living a life that puts others first is one way to define your own legacy. Winston Churchill said it best, "We make a living by what we get, but we make a life by what we give."
Life insurance is about protecting the people and causes you care about most, even if you're no longer here to do so. That's what makes it a truly selfless act. Let's say you name a child or grandchild as the beneficiary on your life insurance policy. The benefit amount (monetary value of your policy) could act as an inheritance that could help pay for college, a down payment on a future home, or a start-up business. If you name a nonprofit as your beneficiary, such as an animal shelter, it could help fund food and shelter for the four-legged friends you volunteered with every Saturday.
The endorsements/testimonials presented should not be construed as a recommendation to purchase or an indication of the value of any product or service. The speaker is not affiliated with the Company and was not provided compensation by AIG Direct.