One of the most discussed topics in the financial world that isn’t related to stocks or bonds is whether life insurance is a necessity or a waste. This debate has been raging for decades, with both sides thinking the other is incorrect, and the answer isn’t so simple. 

The truth is that anyone looking at life insurance should be doing so with the understanding that this program is designed to help protect your family’s financial future when you are no longer here. I can’t think of a more important reason why anyone would ever not consider life insurance knowing this truth. 

10. Do It While Young

Had I waited to take out a life insurance policy now, I might have learned that things might play out differently because I’m slightly older (I’m only in my 40s, relax!). What I learned about life insurance was the stark reality that premiums are far more affordable if you sign up sooner rather than later. 

Don’t Put It Off

If you wait and put off signing up for life insurance until you are older, there is a better than good chance that you might have different health issues, which could mean more riders and a larger premium. Instead, I realized I signed up young enough to complete my policy in a day. 

9. No Premium Increases

One of my biggest concerns with life insurance was the potential for premiums to go up annually. Perhaps I’m too used to traditional health, home, and auto insurance costs going up yearly to assume the same with life insurance, but this is and has not been not the case. 

One Payment, Forever

Of course, this peace of mind with life insurance comes with a caveat: You can not miss a payment, ever. Life insurance companies take missed payments very seriously, and the penalties for one or two missed payments can lead to significant premium increases over the policy’s life. 

8. Long-Term Family Goals

Beyond the end-of-life expenses that will pop up when someone passes away, I felt immediate comfort when I signed on the dotted line for life insurance. This meant that long-term family goals like college tuition would never be a worry. 

Go To College Kids

When you consider having a conversation with your spouse early on to understand how a life insurance policy would be divided, it leads to a lot of peace of mind. This means knowing that some money will be set aside for college tuition, another for a mortgage, and so on. 

7. Easy Application

My biggest concern with life insurance was that “holy moly, the application process will take weeks” and that it might require a visit to a doctor or two to receive a complete health evaluation. 

One And Done

The good news, at least in my case, and what changed my mind, was that I made a life insurance decision the same day I completed the application. It’s possible my insurance agent was just a miracle worker, but she had policies completed for my wife and me by the end of the day after we started the process in the morning. 

6. Customizable Policies

If you don’t know anything about life insurance and only believe what you see on television ads, there is a better-than-good chance that you think everyone pays the same amount of money. What I learned is that this is not true at all. 

Something For Everyone

One important thing that changed my mind about life insurance was that every policy can be customized to the individual. This includes not just the price, but you can pick the coverage amount and add any riders for something like disability, critical illness, or accidental death. 

5. Whole Life Insurance

For many years, I understood or at least thought of life insurance policies as cash in and then cash out. We pay our life insurance provider annually, and that’s it, we pay and forget. However, as we have a permanent life insurance policy, specifically “Whole Life,” it’s not just cash in, cash out. 

Borrowing Against Your Policy

I certainly hope to never be in a situation where I need to do this, but as I have a whole life policy, I learned that not only does this accrue cash value over time, but you can borrow against this increased cash value should you need money for emergency expenses like a medical bill or college tuition. 

4. Debt Protection

While I hope my wife and I never have any debts beyond our mortgage and car payments, this isn’t the reality for millions of people and their families. Unfortunately, if anything should happen to me, my wife and kids would bear any responsibility for any debt I have yet to pay off, which for many families, might be sizable. 

Protect Against Debt

The good news, and what changed my mind on this topic, is that having a life insurance policy will provide enough funding to cover any debt I might have. Let’s say I still had outstanding student debt, as millions of other Americans do. If something were to happen to me well before retirement age, I would rest easy knowing my life insurance would wipe this debt clean. 

3. No Tax Concerns

One of the big benefits of life insurance that too many overlook is the potential tax benefits. The most important thing, and a big mind changer, is that your beneficiary (beneficiaries) will receive the life insurance balance without paying any income tax, which means one big lump sum payment. 

Sorry Uncle Sam

In many ways, this changed my mind on life insurance because my big concern is that if I took out a $500,000 life insurance policy, my wife or kids might be paying 30% (or more) of this money back to Uncle Sam. Instead, knowing that they won’t owe any taxes was an easy way to give me peace of mind. 

2. Peace Of Mind

I know people (e.g. my family) depend on me for financial contributions, so purchasing life insurance was the best move I could make. Whether to protect against financial hardship or allow everyone to mourn before worrying about work and future income, this was the absolute right move to protect against the future. 

Shows I Care

By purchasing a life insurance policy, I know I’m showing my family that I care about their well-being. If, for some reason, I am not here to provide and be the breadwinner, I don’t have to worry about their immediate well-being because life insurance will help them until they can figure out their next financial move. This peace of mind almost immediately changed my outlook on life insurance. 

1. Financial Protection 

Financial protection is undoubtedly the most important of all the reasons you could consider for life insurance. There is no doubt that this is why life insurance exists, or at least the most convincing reason why anyone would spend money on a program like this. 

Don’t Just Rely On Stocks

I think this is so important because you can’t rely just on stocks and 401(k) programs in retirement. Market fluctuations ensure that the amount of money you hope and think you will have in these accounts can fluctuate. A life insurance policy lets your family know there will be money to help pay for funeral costs and other financial obligations like remaining debt after you are gone.

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