Having cash set aside for a rainy day is always a good idea: a savings account will give you a cushion of protection in the event of an emergency, and will help you in planning for your retirement. You might even think it will be enough for your family to live on in the event of your passing, but will you really be able to save enough to ensure their financial stability when you are gone? If you are deciding between buying a life insurance policy or relying on your savings account for your family’s future financial needs, there are a few things you should consider.
The Purpose Of Life Insurance
Life insurance will help give your family financial security in the event of your passing; the great thing about it is that you can choose the amount of coverage you want for your family (or any beneficiary of your choosing), and as long as you make your premium payments, they will receive a lump sum payout, or death benefit, which they can use to pay for your final expenses, or any other expenses that are paid for by your income.
Two of the most popular life insurance policies include:
- Term Life– This is the most affordable and flexible type of life insurance coverage. The policy lasts for a specific amount of time, usually anywhere from 5-30 years, and is best for those who want to cover expenses that last a certain amount of years, such as a 30-year mortgage.
- Permanent Life– This type of policy offers lifelong protection, and so typically costs more than term life insurance policies. It also builds up cash value over time, which you can borrow from, like a savings account; the money you borrow will be deducted from your death benefit, unless you pay it back into your policy.
Pros of Life Insurance
Life insurance offers multiple benefits, including:
- In most cases, your death benefit will be a tax-free payout.
- Your family receives the lump sum death benefit payout quickly after your passing, unlike with a savings account – with a savings account, your family will have to wait until your estate is settled to gain access to your account.
- You pay a low monthly fee to receive a large payout- a term life insurance policy can cost as little as $15 a month for a death benefit of $250,000.
Pros Of A Savings Account
- You can earn interest on your money
- You have instant access to your money while alive
Why Choose A Life Insurance Policy?
Everyone should have a savings account for all of those rainy day expenses, or for retirement planning, but when it comes to your family’s needs when you are gone, just having money in the bank might not be enough to financially sustain them. In fact, did you know that the median savings account balance across American households is less than $5,000, and that, according to a recent study conducted by the Federal Reserve, 40% of adults wouldn’t be able to cover an unexpected $400 expense? Considering that the typical funeral alone costs around $10,000, one of the main reasons to invest in a life insurance policy is the fact that it can be nearly impossible to save up the thousands of dollars necessary to help your family when you are gone. For a few extra dollars a month, you can give your family guaranteed financial security when you are gone with a life insurance policy that will cover the loss of your income, their monthly and annual expenses, and any future expenses like college tuition.
Your family has financial obligations that will not go away when you are gone; they will need your help more than ever with their expenses, and the last thing you want them to worry about is money while they are grieving. There are many great affordable options to choose from that will provide enough money for your family, for a low monthly price. The best way to find the right life insurance policy for you and your specific needs is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.
