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By: Globe Life Staff | June 15, 2024

Why Life Insurance is an Important Part of Your Financial Planning

Life Insurance and Financial Planning

Financial planning is looking ahead and creating a plan for you and/or your family’s financial future. As with any plan, it is a good idea to factor in the unknowns and what-ifs. A good way to prepare is to think ahead about what expenses you pay on a regular basis, what future expenses might be coming up and what income might need to be replaced in the event of a loved one’s death.

Life Insurance and Financial Planning

When planning for your family's financial future, or reviewing your family's financial plan, it is a good idea to consider purchasing life insurance, if you have not done so already. This is because life insurance can help your family cover expenses in the event of a death. When purchasing life insurance, you can select a policy based on your mortgage, the age of your children, your current income, and many other factors.

Life Insurance Helps Cover the Livelihood of Your Family

Should something happen to you, life insurance can help ease your family's financial concerns during a difficult time.

When choosing the amount of life insurance coverage to purchase, you could consider calculating your need based on the following expenditures:

  • Final expenses
  • Mortgage
  • College
  • Debts

When calculating your life insurance needs, one method is to multiply your income by the number of years you want to help provide financial support to your family in the event of your death. You could multiply using the number of years until your youngest child turns 18. However, we know that our kids may need financial help longer than that, which may require a higher amount of coverage.1 These are personal decisions based on a family’s needs and expectations.

The Value of Whole Life Insurance

If you have a whole life insurance policy with cash value, as the premiums are paid on a timely basis the cash value grows. If enough cash value is accumulated, the policyholder may have the option to withdraw money in the form of a loan. Many have found this useful for college, retirement, or an emergency.2

Life Insurance May Be an Important Part of Your Financial Plan

With 38% of American adults reporting that within six months of a primary wage earner’s death they would face financial hardship,3 it is important to have options like life insurance. Help protect your family’s financial future by considering life insurance it may be a solid option for your financial plan.

Sources:

  1. Forbes, How Much Life Insurance Do I Need?, June 2024
  2. IRS, Life Insurance and Disability Insurance Proceeds, Accessed 2024
  3. LIMRA, 2023 Life Insurance Fact Sheet, Accessed 2024
American Income Life articles are researched, written, and edited by multiple members of the American Income Life staff including, Marketing Specialists, Content Writers, Product Experts, as well as Legal & Compliance Professionals.

Categories: Insurance, Life Insurance, Whole Life Insurance

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