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Why should you buy life insurance?

Life insurance can be a bit complex at times, but there are also many potential benefits. Getty Images

If your home gets damaged, homeowners insurance can help pay for repairs. If you get sick, health insurance can help pay for medical bills. But life insurance works a little differently in the sense that you're often buying a policy for the benefit of others.

Some policy types, like term life insurance, provide a payout to beneficiaries if you pass away within a given period. Other policies, like whole life insurance, can give your heirs money whenever you inevitably pass away. 

That said, in some cases, life insurance can be used while you're still alive, such as if you're dealing with a chronic or critical illness, or if you want to access the cash value of a permanent life insurance policy. Life insurance can be a bit complex at times, but there are also many potential benefits.

Not everyone thinks life insurance is right for them, such as if they'd rather build their own savings to pass on to heirs. But many people do like the financial security that life insurance can offer

If you're in the market for life insurance then start by getting a free online price estimate now so you know exactly what to expect.

Why should you get life insurance?

Here are some of the top reasons many people buy life insurance:

To financially protect loved ones in your absence

If you pass away relatively young, your loved ones might not be financially prepared. For example, your children might depend on your income, and if you pass away before they become adults, then you might want to leave them with enough money to live comfortably.

In that case, a life insurance policy, especially a term one, could be used to pay out more than you might be able to save on your own. Many life insurance policies pay out as a lump sum, but there also could be options such as installments. That might help your family cover costs over time, similar to replacing your income.

To leave a nest egg in your absence

Related to financially protecting your loved ones in your absence, you might want to leave a nest egg for others, whether that's family members or a cause you care about, like a charitable organization.

For example, if you take out a life insurance policy that has a death benefit of $1 million, that could be a larger nest egg to leave behind then perhaps you would have been able to save for on your own within, say, a 20-year period.

Get a free online price quote for a life insurance policy from Haven Life here.

To pay down debt in your absence

Another reason why you might get life insurance is to pay down debt in your absence, such as if you don't want your spouse to be stuck paying off a mortgage on their own.

Keep in mind that your heirs might not be responsible for all of your debt — it depends on the specifics, like if they're cosigners. So, you may want to speak with a financial professional to better understand if and how life insurance could potentially help your family handle debt.

To use as a cash resource while alive

Some types of life insurance, like whole life insurance, can build a cash value alongside your death benefit. Depending on the specifics of the coverage, you might be able to access that cash value via borrowing, withdrawing some money, or using it to pay premiums, for instance.

However, sometimes withdrawing money requires surrendering your insurance policy, so it's important to know the policy details before acting. Regardless, building a cash value could be attractive to some people, such as those who struggle to save on their own and want to have this type of resource available after paying premiums.

You also might be able to access some of your death benefit while still alive, such as if you have a chronic or critical illness rider. While that could increase premiums, you might want that flexibility to help yourself and your family when dealing with an illness.

To cover end-of-life care

Another reason to consider life insurance is that it can cover end-of-life care, whether that's via a living benefit, like with a critical illness rider, or if it covers final expenses, like funeral costs.

Some forms of whole life insurance are marketed as burial insurance or final expense insurance. These generally have relatively small payouts but cost less than a traditional policy, and they can help your family pay for a burial or cremation, for example. While some people prefer a broader plan or want to save for final expenses on their own, others prefer the narrower scope of coverage.

If you're interested in a policy like this then start comparing providers here or use the table below to review some top insurance companies.

The bottom line

As you can see, there are many reasons to consider life insurance. Some people want to protect against specific scenarios, like passing away before your children become adults, while others like the potential financial benefits that life insurance can provide while still alive. Consider what matters to you and what your preferred financial strategies look like, and then see how life insurance might fit into your financial plan.

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