9 Key Reasons Life Insurance Can Be Important For Your Loved One

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Life insurance is for the living. It’s something that people buy to help take care of those they love. It’s an emotional purchase. We sometimes shy away from buying life insurance because we don’t want to talk about death and our mortality due to its taboo nature in society.

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Often, but not always, our more logical side will override the fear, which can include thinking about what our death means for our loved ones, not only emotionally but financially. We’re going to look at why life insurance matters – to your spouse (partner), your children, and yourself. It can truly make a difference in their lives, and though you may not yet think so, in your life as well.

Let’s take a look.

Reasons Life Insurance Can Be Important For Your Partner or Spouse

If you’re like many couples, you’ve blended your finances, and you’re all in – “what happens to me happens to them.”

We must now ask an important question – why are you buying life insurance for your partner? Yes, it’s another expense. But it’s a different kind of an expense than a gym membership or a monthly clothing allowance. When you find the best life insurance policy for you, it’s an expenditure that can positively impact the rest of your partner’s life if you die unexpectedly.

1. To replace lost income

If your paycheck matters and makes a difference in you and your partner's lifestyle, life insurance is important to them. 

When a partner passes away, it’s a very difficult time for the surviving partner, even if it wasn’t unexpected. That partner must continue moving forward with their life, as painful as that may be for them. In the short term, they need to take care of final arrangements, burial and funeral costs, notifying family and friends, writing an obituary, and so much more. It can seem to be an endless journey for them while they’re still feeling numb.

In the long term, they have to resume life and carry on with their daily responsibilities, including going back to work and taking care of themselves physically and emotionally. 

They’ll also need to continue meeting their financial responsibilities. Mortgage or rent payment, car payment, student loan repayment, installment loans on things like furniture you bought together – all of these bills must be paid each month just like they were when you were alive.

The life insurance policy you leave behind will make all the difference in easing their transition to a life without you by their side. The big things will be taken care of, such as the house payment as well as the little things: comfortable clothing, high-speed internet, streaming video service, dinner out with a best friend – their life as they’ve known it.

Besides the memories they have of your life together, the life insurance policy you leave behind may be the most valuable thing you can leave them. They’ll thank you for the rest of their lives.

2. You’re going to have a baby

If the two of you are going to have a baby or are in the process of adoption, the financial needs of your partner may be even greater. There will be two mouths to feed, and the surviving partner may need to stay home focusing on your newborn. Or they may need to pay for childcare if there isn’t a relative nearby that can help out.

If you’re already pregnant and are the breadwinner, you may find it difficult to qualify for life insurance, so it’s best to get it before or after the pregnancy. 

3. You have debt

A surviving partner who has to repay all of the loans you had together by themselves will not be a happy person.

Credit card debt, private student loans, car loans, business loans, personal loans, home equity loans – these all must be repaid even though you’re no longer around. Without life insurance to replace your contribution, these loans can become very difficult for your partner to manage on their own.

4. Cover final expenses

The cost of a funeral, casket, burial, and other final expenses can easily exceed $10,000. Without life insurance, who’s going to pay that?

The sad truth is that most American families live paycheck-to-paycheck and don’t have enough money in savings to pay for a $1,000 emergency. When a partner dies, this can leave the partner left behind in a real bind when it comes to saying goodbye.

There are pre-paid final expense plans you can budget for each month, but you’re adding more debt. Life insurance will give you the guarantee that your last wishes are taken care of, and your partner doesn’t have the burden of paying all of the costs associated with dying.

5. Pay estate taxes

If you have a sizable estate, your survivors will have to pay the Internal Revenue Service when you die. There is an “unlimited marital deduction,” but that cannot help a non-married partner. And it can impact them in powerful ways.

For example, many times, to raise money for estate taxes, real estate, or business interests, a deceased person’s estate must be liquidated. This can be very disruptive for a surviving partner focused on dealing with their grief.

Life insurance can provide the funds needed to pay estate taxes, eliminating the need to sell assets that the surviving partner needs for the well-being of their finances and lifestyle. Having life insurance to provide money for a surviving partner is essential for them. Not only does it help them with their financial needs, but it will also give them peace of mind, and you too.

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Reasons Life Insurance Can be Important For Your Dependents

The root of the word “dependent” is “depend.” It means people depend on you to take care of them, whether you’re there or not. Here’s how life insurance can help you do that and why it’s important to them.

6. Pays college costs

If you have children, chances are you want them to have as much education as they’d like after they graduate high school. You want them to be and do whatever they aspire to, and the key to that is often higher education.

Life insurance can help you ensure that your children can pursue continuing education if you die before they have the chance.

7. Take care of aging parents

If you help your parents out financially by having life insurance handy, you’ll have peace of mind knowing that they’ll receive the same level of care after you’re gone.

Regardless of their needs, such as skilled nursing care or the ongoing services of a home health aide, they’re going to receive the care they need and be comfortable.

Reasons Life Insurance Can be Important If You Don’t Have Dependents

Even if you don’t have a partner or any dependents at this point in your life, life insurance can still be important to you. Here are several needs you may have that life insurance can meet.

8. Diversify investments

Some people like to use life insurance not only because it pays a death benefit to a named beneficiary but also because it accumulates value.

With permanent life insurance policies, like whole life or universal life, part of the premium you pay each month goes toward the death benefit, and part of it goes towards building cash value. This savings element accumulates on a tax-deferred basis and can be borrowed in the future without paying taxes.

You can also receive dividend payments based on the product’s performance. By contrast, term insurance accumulates no cash value. It strictly provides a death benefit.

9. Business planning

If you’re a business owner, you need life insurance. It will cover your obligations so all of your hard work isn’t wasted. You can avoid having your business sold off piece by piece to settle up with creditors. Life insurance can pay them what you owe them, and you can leave the business behind to family members who can assume ownership or sell it.

If you’re in a partnership, life insurance will provide money for your surviving business partner to buy you out if you die, with your survivors getting the proceeds from the sale. Your business partner should also be insured so you’ll have full ownership if they die and not be partners with someone you don’t want to.

The Right Reason For Life Insurance Is Your Loved Ones

Buying life insurance can be an act of care and a way to let you live without being concerned about your loved ones after your death. 

No matter your reasoning for getting life insurance, make sure to talk with a financial advisor or a professional life insurance agent to determine how much life insurance you may need. Having life insurance handy can offer you a lease on life.

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