Who, when and why should have life insurance?

life insurance

The most common reaction to the mention of life insurance is generally denial or postponement. Nobody feels that it is time to think about their own mortality and it is very easy to find an excuse not to even consider such a situation: “I have no plans to die yet”, “I am young and in good health”, “my spouse will be able to take care of the boys”, “my parents can help”, or a slightly cruel but quite common one, “no one is going to get rich on my account, nor is another person going to come and enjoy the benefits of my death”.

All these reasons are the product of not knowing the real reason for life insurance or its value. Contrary to most insurance that helps its owner to recover from an event that directly affects their economy, life insurance is for the benefit not of the owner of the insurance, but of his or her loved ones. Many experts believe that if they were called by a different name, many people would regard them with greater interest.

Regardless of what you want to call this protection, life insurance is just that, financial protection for loved ones, and should be considered virtually only when there is a need to take care of family or commitments. Basically, the use and reason for life insurance are to replace within the family the product of the economic facilities that you provide, such as your salary, your job, your care, etc.

This puts on the same level both the person who provides the family income and the spouse who takes care of the house and the family. If the contributions of one or the other ceased to exist, the survivor would need to supply them in some way. It is as hard for a wife to have to go to work because her husband dies, as it is for a widowed husband to have to take care of the children and continue his work simultaneously, to use examples of stereotyped family situations.

While it is possible that whoever survives can take care of most of the needs, it will surely not be enough and in the end, many things end up being sacrificed. It is at this time that having the support of additional income is more of a peace of mind than a way to get rich.

This is the case of Marta and Andrés, who in the early 1990s moved their construction and repair company to the United States and settled with their three children, ages 3, 4, and 8. Marta had her hands full with the three boys and in her few free moments, she painted. Her dream, of course, was to hold an exhibition of her paintings in the United States. Andrés was the engine of the company and directed all the operations and sadly Marta was not aware of anything about the company. A few years after settling in the country, Andrés suffered a heart attack and Marta was left alone to lead the family, the business, the children, and well… despite her strength of character, they were very hard times.

As you can imagine, Marta had to forget about her dreams of painting for a long time. She had to deal with a business that she did not know, is a relatively new country for her and with the children still very young. However, Andrés showed that his family was always her priority and Marta was able to face these many sorrows with a little more ease because Andrés had life insurance.

This foresight of Andrés provided Marta with the necessary funds for the funeral expenses, to pay the debts they had and put the money to earn interest with which they survived a few months until she was able to take control of the business and adapt it to her abilities. For example, Marta was able to take charge of it after she sent for her sister to be with the boys, while she learned the requirements of the business and built up a clientele in the new direction she gave it: instead of continuing to build and repairing, Marta turned her business into a remodeling and decorating business, much more appropriate with her artistic leanings!

But still, if no one depends on you, you may be interested in leaving what you have worked so hard for to someone you love or to an organization that can make good use of resources on your behalf. For this reason, many people take advantage of the benefits of life insurance to create an inheritance. And in many cases, even to put in the hands of their heirs the means to protect other equally valuable legacies.

For example, at the time of death, the federal government and many states apply taxes that, depending on the estate, can be so high that an heir without the means to pay them could be forced to sell the estate just to pay. taxes. In this case, the benefits of insurance can be used to make this inescapable disbursement of taxes and still maintain the inheritance without liquidating it.

Finally, many people find that it is a form of savings, as long as they choose a permanent type of life insurance (or as it is known in English whole life insurance ), in which a portion of the premiums of the first years of contribution is invested and at a given moment could serve as collateral for a loan or as a form of savings.

In summary, life insurance is a benefit that you obtain for your family and loved ones and that will allow you to achieve one, several, or all of the following objectives:

  • Replace the income you produce in the event of your death.
  • Have funds for unexpected funeral expenses or similar arrangements.
  • Create an inheritance for your loved ones.
  • Make a charitable contribution to the charity of your choice.
  • Pay inheritance /estate taxes.
  • Have a financial instrument that makes it easier for you to save, invest or have collateral for loans.

Think about what your family would have to deal with if you weren’t there, and how you could make those difficult times easier for them.

By aamritri

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