“For I know the plans I have for you… plans to prosper you and not to harm you, plans to give you hope and a future.” – Jeremiah 29:11
Financial milestones are fundamental building blocks of this journey we call life. From preparing for college, saving for a home or a car, all the way to stashing away for retirement, careful planning and saving are requirements for big purchases.
But even the best-laid plans can take a sudden turn for the unexpected. And in the case of an untimely passing, it can bring a hefty price tag for the loved ones left behind. Thankfully, to help alleviate that burden is life insurance.
You’re probably asking yourself, “But how does my life insurance policy help my loved ones?”
That’s a great question. Let’s review a few of the ways a life insurance policy does just that.
Paying off Debt
Most of us accumulate some level of debt throughout our lives: a mortgage, car loan, or student loan. Then there’s revolving debt, such as credit cards, which have a higher chance of negatively impacting credit scores when balances are charged off.
When a person dies before outstanding debts are paid, the remaining balance may financially burden the estate, family, and heirs. Cosigners and joint account holders of the deceased could be liable for paying the remaining balance.
A life insurance policy can provide a financial safety net for loved ones left holding the responsibility for the remaining debt.
Providing Lost Income
One of the primary reasons to have life insurance is to help cover the gap in lost income after the death of a loved one. If you’re married and have children, this is extremely important—especially if you’re the primary breadwinner. Without the additional income, mortgages or tuition costs can become unaffordable. An unexpected death places the full responsibility of monthly bills—utilities, cell phones, internet—on your spouse.
For some, a life insurance policy could prevent needing to sell their homes or other valuable assets to cover the leftover loans.
Planning for the future can offer peace of mind for some that their loved ones will be taken care of in the case of a sudden passing. According to a 2019 Federal Reserve survey, 39% of Americans would not be able to pay for an unexpected $400 expense between cash, savings, or a credit card by the next statement. Additionally, 12% of respondents said they could not cover the cost by selling possessions either.
While the loss of a primary earner could destabilize many families with the sudden combined costs of living, even a modest life insurance policy could help fill the income gap. Life insurance can seem confusing and difficult to know exactly what you need, our advisors are here to help you navigate the steps to setting up a policy. Give your BDI agent a call to start a quote.
BDI. Insurance advisors you can trust.