When it comes to strengthening your overall financial wellness, many people could benefit from flexing their muscles with a greater understanding of life insurance.
Think about going to a gym and walking into a room with a variety of machines and equipment. What if you don’t know what they do or how to properly use them? This is similar to how many Americans feel about the various forms of life insurance. People know they need it, but they are often unsure of the type of coverage they should get and when to get it.
To help you get started, here are five important questions you should ask yourself.
Why do I need life insurance? Many people simply overlook the important role that life insurance plays in financial planning. It’s not typically as popular of a topic as portfolio construction or retirement income planning. The reality, however, is that as we transition into adulthood and take on growing responsibilities and family obligations, life insurance soon becomes fundamental to having a comprehensive plan.
Thinking about the unexpected isn’t always easy, but taking the necessary precautions has it benefits. Just like a healthy body, protecting your assets in your financial plan with life insurance can help mitigate future risk. For example, if you have outstanding debts or financial obligations, the right policy may help ensure that those burdens do not fall on your family members after you’re gone.
Beyond the most common use, which is providing a death benefit, life insurance may also come in handy for more sophisticated planning. If you have a child with special needs or a life-altering condition, death benefits may provide the ability to secure their financial future without adversely impacting your other children. Or, it could provide the means to cover any taxes that might be left on your estate.