Insurance is another important aspect of one’s financial plan. One of the most common reasons for buying life insurance is to replace the loss of income that would occur in the event of your death. When you die and your paychecks stop, your family may be left with limited resources. Proceeds from a life insurance policy make cash available to support your family almost immediately upon your death.
Life insurance is also commonly used to pay any debts that you may leave behind. It can be used to pay off mortgages, car loans, and credit card debts, or it can be used to help leave other remaining assets intact for your family. In addition, life insurance proceeds can also be used to pay for final expenses and estate taxes or it can help create an estate for your heirs.
Insurance planning depends on a number of factors, including whether you’re married, the size of your family, the nature of your financial obligations, your career stage, and your goals. For example, when you’re young you may not have a great need for life insurance. However, as you take on more responsibilities and your family grows, your need for life insurance usually increases. Life insurance can have a major impact on one’s financial plan. Since your needs will change over time, you’ll need to continually re-evaluate your need for coverage.