The main benefits of purchasing life insurance is to protect your loved ones against the financial hardships that they may suffer after your death due to the loss in income and also the final expenses that they need to meet with, after your death.
Death can have devastating consequences financially. It is very true that nothing can replace the presence of a family member but the financial consequences that your loved ones will bear after you are gone, can be very devastating. Without life insurance your loved ones will need to bear extreme financial hardships after you are gone. As per statistics a particular number of people will die before they reach their normal life expectancy. If you are the sole breadwinner of your family you must realize that your death will have consequences that will affect your family members drastically. Although nothing can be done about their emotional loss, you can make sure that their financial life is at least secured.
Two major benefits for which you must purchase life insurance are as follows.
A. Protection against financial consequences of death
There are some costs that need to be met with when a person dies. Even these are covered by life insurance. Some of the financial consequences of death are as follows.
1. Funeral expenses: After your death your family will need to take care of the funeral expenses. These costs may vary from one country to another. They are also dependent on the type of area and the type of funeral service. Along with the funeral expenses there will be burial expenses. They may also have to pay for the future care of the site of burial.
2. Debts incurred by you: All the debts that you had taken, forms a major cost of what your family members will have to pay towards, after your death. These may include credit card balances, automobile loans that you may have taken as well as bank loans. Your accrued taxes are also taken as your debts. Any unpaid property taxes or income taxes or any other taxes are to be considered.
B. Future security of loved ones: You also have some obligations towards your loved ones. Your spouse may not be working and may need mortgage payments to be made and may also be dependent on you for living expenses. Your dependents will have to manage without your income after your death. If you are an earning member, then the loss of your income may lead to a great deficit in the budget of your family. However, life insurance is also important if you are not an earning member and stay home to take care of your kids. This is because the surviving members would have to incur extra expenditure to replace your contributions to the lifestyle of the family, after your death.
These are a few reasons for which you must purchase life insurance. Whether or not you are an earning member, buying life insurance is important.