5 Reasons You Should Purchase a Life Insurance Policy

life insurance

It’s no secret that purchasing a life insurance policy is at the bottom of a lot of Americans’ to-do lists. Studies show that individuals feel household bills have a more immediate impact on their lives and should be paid first, while others believe life insurance is simply too expensive to purchase.

Unfortunately, there are a lot of misconceptions associated with the cost of coverage. Many don’t realize just how affordable buying a whole or term life policy can be. They also are uninformed about a policy’s ability to dramatically boost a family’s financial security.

Life Insurance Is a Low Priority for Consumers

Despite the many benefits purchasing a life insurance policy can bring, many consumers find it difficult to justify purchasing or maintaining coverage due to a number of factors — one of the biggest being cost.

A New York Life survey released in September revealed that Generation X (Americans born from 1965 through 1976) struggled with making life insurance a priority. In fact, an astounding 20 percent of Gen Xers reported having zero life insurance, which is an increase from 5 percent in 2008.

The reason cited for the lack of life insurance was the current economy; more specifically, the impact of the 2008 financial crisis, which left millions feeling financially unstable and in need of making expense cuts.

A separate survey released in the same month by ICR for The Lifeline Program revealed that 55 percent of Americans allowed their life insurance to lapse in their senior years, as they decided other expenses like long-term medical care should take precedence.

In both cases, individuals determined that life insurance benefits were not strong enough to justify making a purchase when comparing coverage costs to other expenses.

Why It’s Time to Buy a Whole or Term Life Insurance Policy

One common misconception about life insurance is that it’s too expensive to purchase. One study conducted by the LIFE Foundation in 2012 revealed, however, that purchasing a term life insurance policy can cost as little as $150 per year for $250,000 in coverage.

The reasonable cost of coverage is not the only reason to purchase a policy, according to the LifeHealthPro 2013 Life Insurance Study, released in September. The study revealed five additional reasons consumers typically purchase coverage:

1. Provide Income for the Family

If the primary breadwinner of the family suddenly dies, the remaining family members could be left with no income to pay immediate expenses, including the mortgage, car payments, food costs and more. Purchasing a life insurance policy provides the family immediate financial relief under this circumstance.

2. Pay Off Debt

If immediate bills are not the concern of a policyholder, a life insurance policy could still be effective in paying off debt like student loans, car loans and other bills that were the sole responsibility of that individual.

3. Cover Funeral Expenses

Funeral and burial services can be incredibly costly. In 2009, the National Funeral Directors Association found that the average cost of a funeral totaled $6,560. This covered transportation to the funeral home, embalming, physical preparation, viewing service, hearse, service car and casket.

Financial challenges can arise during this unfortunate period as most people don’t have this much in savings laying around, but life insurance benefits account for this inevitable event.

4. Pass Wealth to Heirs

Many families don’t have enough savings to pass a considerable amount of wealth on to their heirs. By purchasing a life insurance policy, individuals have the opportunity to provide their beneficiaries with financial comfort.

5. Pay for a Loved One’s Education

Parents who want to send their children to college may worry that their dream will be cut short, if they die before saving enough money for their child’s tuition. As a result, many purchase a life insurance policy to ensure this dream is realized.

This is just a short list of the many reasons consumers should consider purchasing a life insurance policy. The best way to feel comfortable about making this important purchase is to begin exploring life insurance quotes, which can help you find coverage that’s affordable for you.

Photo: Evil Erin