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3 of the best reasons to buy life insurance

There are many great reasons to buy life insurance. Getty Images

Buying a life insurance policy can help you and your family financially in several ways. With some life insurance types, like term life insurance, you can protect against scenarios like passing away while you have young children. Rather than being financially unprepared, you could leave them with a nest egg to navigate your absence a little more easily.

Other life insurance types, like whole life insurance, can also have an investment component that some people are drawn to.

Accordingly, the benefits of life insurance are both significant and personal to the individual in question.

If you're in the market for life insurance then start with a free price quote so you know exactly what to expect.

3 of the best reasons to buy life insurance

If you're wondering about life insurance and its ultimate worth, consider some of the best reasons to purchase a policy:

To protect loved ones in the event of early death

One of the main reasons to buy life insurance is to protect your loved ones in the event you pass away sooner than expected. In particular, buying term life insurance can help reduce the risk your loved ones would face in the event of your death during the coverage period.

For example, when starting a family, you might buy a 20- or 30-year term life insurance policy. That way, if at any point you pass away during that period (when your kids could be relatively young and/or your spouse might rely on your income) you can provide them with financial protection.

If you earn $50,000 per year, for instance, you might take out a life insurance policy that has a death benefit of $500,000. That way, if you pass away, your family would have more of a cushion in terms of replacing your income for several years, if not for decades, such as if they invest a lump sum payout wisely.

You can easily see how much life insurance you're eligible for (and how much it would cost) online now.

To use as a cash alternative while alive

Another reason to buy life insurance, specifically one that builds a cash value — like many whole life insurance policies — is to use it as a cash alternative while alive. In other words, life insurance doesn't have to be something that just pays out after your death.

With a policy that builds a cash value, part of your premiums goes toward a cash benefit as well as a death benefit. Depending on the insurance company's terms for your policy, that cash value might grow at a guaranteed rate; or, with variable life insurance, for instance, your cash value can be tied to investment performance.

While some people prefer to manage investments on their own outside of an insurance policy, others prefer to have these investment and life insurance aspects under one umbrella. Doing so might make it easier to stay organized or have peace of mind with your financial planning, for instance.

You can then cash out this asset, such as by making withdrawals or using the cash value to pay your life insurance premiums. Here too, terms can vary depending on the insurance provider, and you'll want to be aware of issues like if cashing out a certain amount means surrendering your policy.

To leave a nest egg

Related to protecting loved ones, leaving a nest egg is also a reason to buy life insurance. Providing beneficiaries with a significant lump sum payout can occur through either term life insurance or whole life insurance, so it's not always just a matter of protecting against early death.

For example, you might like the idea of leaving a large nest egg for your favorite charitable cause, which you can designate via your insurance policy. Some people might struggle to build up a nest egg via their own saving and investing strategies, so you might prefer the idea of just making monthly payments for insurance premiums and then leaving behind a lump sum.

Some people also want to leave their families with a nest egg for large purchases like college tuition. You could buy a life insurance policy so that if you pass away before your children go to college, life insurance claims can help cover that cost. And if you have a longer term life insurance policy or a whole life one and you end up living a long life, then you might be able to leave a nest egg for your grandchildren's tuition, for example.

The bottom line

These are some of the top reasons to buy life insurance but they are not the only ones. Ultimately it depends on what's important to you. There are many life insurance types with varying costs and benefits, so if you're considering getting life insurance protection, then you'll want to weigh your options.

If you want to reduce certain risks like leaving your family in a precarious financial position after passing away young, then you might want to buy term life insurance. Or, if you want your insurance policy to build a cash value, then perhaps whole life coverage makes sense.

If these types of life insurance benefits appeal to you, take a look at different types of policies to see what they cover in more detail. From there, you can assess what works best for your situation.

You can easily review some top life insurance providers here now or via the table below. 

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