Do you know what happens when you don’t have life insurance? While no one particularly likes contemplating his or her inevitable departure from this world, if you have loved ones you want to ensure are financially protected should you pass away, you need to consider getting life insurance. Here is a look at what happens if you do not have the security of life insurance in place.
What is life insurance?
First off, let us take a look at what life insurance actually is. Basically, it is a contract between a policyholder and an insurer. If the policyholder should die, the insurance company pays out benefits to the designated beneficiaries. That could be someone like a spouse, adult child, sibling, parent, or friend, or it could be a trust or a charitable organization. The beneficiaries could receive things like lump-sum payments, installment payments, retained asset accounts, or annuities.
Life Insurance Is an Important Part of Your Financial Plan
Just like health insurance, a mortgage, and other financial obligations, life insurance is an integral part of anyone’s financial plan. Thankfully, it is easier than ever before to find the right life insurance plan for you. Simply compare life insurance premiums online to find the best and most affordable option. But you do need to consider how much life insurance you need before you sign on the dotted line. There are several types of life insurance policies, such as whole life insurance, term life insurance, and universal life insurance. The exact coverage you need will depend on various factors specific to your circumstances. But you can gain a good idea by calculating your long-term financial needs and subtracting your assets. The remaining amount is how much your policy would need to cover. If you do not have life insurance, you will not be able to create a solid financial plan for the future.
What Happens When You Die Without Life Insurance
If you pass away and you do not have life insurance, your family will have the burden of paying your final expenses. That includes paying funeral and burial costs and any taxes and debts. Furthermore, if they are not beneficiaries of a life insurance policy because you have not taken a plan out, they will not have any financial security for themselves. Even if you are young, it is important to think about your funeral costs, debts, and your family’s financial position and obligations should you die. The best life insurance covers all of those concerns and ensures none of your family members are left out-of-pocket.
What Happens When You Don’t Have Living Benefits
Life insurance policies can also benefit you yourself while you are still alive. Some life insurance policies provide death benefits and living benefits. The latter is a rider that allows you to tap into your death benefit payments while you are still alive. Should you become terminally ill or need money to pay for medical care, the rider can become very useful. If you do not have a policy with living benefits, you could have to pay for such costs yourself.
You Can Leave Your Loved Ones Confused and Stressed
Life insurance is not only about the money. Yes, it is about making sure all of your final costs are taken care of and your loved ones are financially secure after you have passed on. But that translates to: looking after your loved ones. When financial matters are taken care of, your family and friends have adequate time to mourn instead of being burdened with a whole host of demanding financial issues. If you do not want to leave your loved ones feeling even more confused and stressed during a difficult time, having the right life insurance policy in place is the best thing to do.