A life insurance policy is a contract between an insurance policyholder and an insurer or assurer in which the insurer promises to pay a sum of money to a selected beneficiary upon the death of an insured individual. The contract states how much money will be given to your recipients.
Discussing such details with a stranger at a life insurance firm may seem morbid. On the other hand, financial advisor Spencer Betts feels it’s smart to be prepared for the worst-case scenario with a measure that won’t break the bank.
“Life insurance on someone between the ages of 40 and 60 is incredibly inexpensive because there is a very low possibility that you would die,” he adds.
According to Betts, four categories of persons should obtain life insurance.
1. Individuals with private student debts
While federal student loans are erased when the borrower dies, private student loan borrowers may face different situations.
Private student loan debt put out on your own may be dismissed without issue  though not always, as each lender’s policy varies. If a private student loan with a cosigner were taken out before November 20, 2018, the cosigner would be responsible for repaying the loan. According to the Economic Growth, Regulatory Relief, and Consumer Protection Act rules, a cosigner must be released from their obligation if the loan originated on or after November 20, 2018.
Your cosigner or next of kin can satisfy your student loan debt if you have appropriate life insurance coverage. But that will only happen if you die, no matter what terms and conditions your loan servicer has set up.
2. Individuals who have cosigners on their loans
The auto company may seize your car if you’re single with no dependents and have a $20,000 car loan. However, they won’t come after any other family member because nobody cosigned for you. Cosigners, on the other hand, are accountable for paying off unpaid debts after a person dies.
So, if you cosign on a personal loan with someone, for example, you’ll want to get a life insurance policy that covers the amount of that debt.
3. Business owners who desire to pass on their company to their offspring
Betts says, “If you own a business and want to pass it on to your children after your death, life insurance may be more beneficial than you think.”
If you die as the sole owner of a business, the value of that business may be liable to estate tax. Suppose you want to continue the family business, farm, or similar. In that case, you may require life insurance to offset the estate tax.
The surviving partners may sign an agreement outlining the division of assets upon the death of a company partner.
You can say something like, “In the event of the death of my business partner, I will compensate his heirs for half of the firm’s value.”
Your business partner can count on the money from your life insurance policy if you die too soon. This money will also help your family.
4. Parents with disabled children
Betts recommends parents of special-needs children purchase life insurance to ensure their children’s daycare bills are covered after death. The youngster should not be the beneficiary of their parent’s insurance policy. In some circumstances, a special needs trust would be preferable.
Betts claims, “This is one of the most common reasons for purchasing life insurance. If you have special needs children, you may require life insurance to provide long-term care for your child or dependent.”
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Bio:
Mark Zimmerman, Sr currently is the Managing Member of Aurifex Financial Group, LLC. Aurifex Financials mission is to help clients realize their vision of living life on their own terms by providing credit repair, financial counseling, insurance solutions, and money lending services. This is accomplished by using a holistic approach. After hanging up his uniform after 22 years of service in the military, Mark still had a desire to help others, so he created Aurifex Financial.
As part of Accredited Financial Counselor (AFC) credentials, Mark had to obtain and document over 1000 hours of helping others which was accomplished by helping hundreds through a local non-profit. As an independent Insurance Agency, Mark is licensed in property and casualty, home, business, health, Medicare, life, and annuity products.
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