Some people view health and auto insurance as a necessity and life insurance as a luxury. Why is that? Insurance is designed to step in when you or your loved ones experience an unexpected loss or expense of some kind and to prevent you from financial devastation. The loss of a loved one is the greatest loss of all to a household not only emotionally, but the financial impact can be significant as well. For several reasons, life insurance is an insurance policy just as essential to your life as health and auto insurance.
The most well- known benefit of a life insurance policy is to ensure that the surviving household members will be financially taken care of if the primary income-earner of a family passes away. Realizing the impact of a loss of income is of particular importance for those with minor children. Realistically, most people do not have enough wealth amassed where their family will not sustain any financial losses if they die unexpectedly. However, even if you are not the primary income-earner, the loss of one income in a two-income household can have a detrimental financial effect.
Another, less discussed benefit of a life insurance policy is the immediate death benefits that it provides. Even if you are not an income-earner in your household, the cost of funeral expenses and other death-related expenses can place a substantial financial burden on the shoulders of your loved ones in the event of your passing. With the average cost of a funeral nearing $10,000, you have to ask yourself would your family be able to absorb that without you? For many, the answer is no. That is why it is not unheard of to purchase life insurance policies, even for minor children, in the event of an unexpected death.
Admittedly, there are a few circumstances in life where you may not need life insurance. If you no longer have dependents that rely on your income and have enough saved to cover your funeral costs, as discussed earlier, a life insurance policy may be unnecessary. Another situation where you may not need a life insurance policy is if you have enough wealth saved to provide for your dependents even if you were to pass. However, for most of the population, neither of these situations applies. Life insurance, then becomes an essential part of one’s insurance portfolio. Whether it is needed to cover funeral costs or to support your dependents to make up for lost income financially, life insurance coverage is just as essential as auto and health insurance.