The Real Cost of Not Having Life Insurance

Life insurance is the broccoli of financial planning. It is deemed necessary. Therefore, they acquire it but hardly take the time to use it effectively. Some people do not pay any attention to it as if it can be treated later on, while others believe they do not need it. However, the cost of not having life insurance is not only financial. It is a cost that the dependents can afford at the worst of times. In this article, the reader will discover the true cost of not having coverage.

Life Insurance Overview

It is a method of ensuring that your family is financially secure by offering them cash, especially when you are no longer alive. In the event of your death, while the policy is still in force, the insurance company pays the nominated sum of money to the beneficiaries. This money is referred to as the death benefit, and it can help your dependents feed themselves, pay rent or mortgage, and pay electricity and water bills, among other expenses.

For instance, if you are the family breadwinner, then your family’s destiny is to struggle to feed itself after you are gone. That is why it is important to learn about life insurance to make a decision early. It will not ensure that your family will be able to earn as much as you used to. However, it will assist them in remaining as close to the same financial status as they were before your demise.

Other reasons for taking life insurance include covering burial expenses, paying off debts, or leaving something behind for the family or charity. It can also be used to manage long-term care for clients or as a tool for estate planning for those with complex financial requirements.

Consequences of Not Having Life Insurance

Lack of it has serious financial implications for those you hold dear. It is time to consider the costs likely incurred when one cannot purchase a life insurance policy.

Financial Burden on Loved Ones

Burial expenses do not end when a person’s life ends. Burial expenses may range from $7000 to $12000, while other costs like medical bills, legal fees, and other expenses are also incurred. In case of your death, your family has to pay for these expenses out of their pocket, which may result in spending all their savings, incurring more debts, selling off assets, or even being compelled to shift to a cheaper house. Life insurance is helpful because it is available to assist when required.

Loss of Income

If you are the family breadwinner, your absence will greatly affect your family’s financial position. It preserves the family income to enable them to cater to other expenses that they may incur during the year. You should also ask yourself whether your spouse can accomplish all these independently. What amount of money should be kept in our savings account for the next few months of our needs? If the answer is no, then it is high time one considered getting coverage for the paycheck.

Outstanding Debt

This means that when one borrows money, it does not mean that the borrower will die when the borrower does. At times, credit card dues, personal loans, or home loans can be billed to your estate or even to your co-signers or family members. Paying such dues helps ensure that your family does not suffer from debt or receive daily calls from creditors.

Emotional Stress Made Worse

Losing someone close to the heart is always a tragedy that one can never wish to go through. However, what happens when the loss is combined with financial pressure? That’s a double blow. With no life insurance, people can face options like taking a loan, selling household items, or using online crowdfunding. In this way, a policy helps your family avoid financial concerns while mourning.

Disrupted Financial Goals

It can be used to meet long-term needs like home mortgages, business expansion, and retirement, among others. It ensures that the long-term goals in life persist even in the absence of the policyholder. Without it, your family will be forced to spend money that would have been used to cater to the present in the future. This can mean continuing working until retirement, closing a business, or sacrificing one’s child’s college tuition.

Missed Tax Benefits

Regarding taxes, people who want to reduce their taxes should consider getting life insurance. For instance, policies can be under Section 80C of the Income Tax Act, which allows people to save tax, and payouts may be tax-free under Section 10(10D) if certain conditions are met. For protection, life insurance is available as a term plan; for investment, it is an endowment policy or a unit-linked plan.

You should understand that nothing is more costly than having no life insurance policy. Thus, when you make a premium payment today, you protect your family so they are not required to pay anything in your absence. It is better not to wait for the tragedy – save the best.