If you are in debt, and numerous recent studies show that most people are mired in debt, you may ask yourself if life insurance fits into your financial plan.
Most types of end-of-life insurance are affordable. For example, a 20-year, $500,000 retirement plan for a 35-year-old woman in good health can cost as little as $17.50 a month for people with student loan, credit card or mortgage debt. This may make you wonder if they can meet their budget with life insurance payments.
The fact is, even if you have credit card, car loan, student loan or mortgage debt, investing in affordable long-term life insurance can still be a smart financial move.
In addition to protecting people who share debt, such as a parent who may have co-signed a student loan or a partner who may co-owns the family home, life insurance terms can provide much needed financial stability for loved ones in the worst case scenario.
Here’s what you need to know.
Life insurance can protect your contractors
Many people don’t understand what happens to debts after they die. Some debts can be paid off posthumously, but others cannot. This is especially true if you have a guarantor for your current debt.
For example, if your parents co-signed a student loan, even if they no longer have your income, they may be responsible for paying off the student loan in full. If your spouse or couple co-signed a car loan or home equity loan, you will be responsible for the monthly payment. If you and your spouse or family member share a credit card, they will need a way to pay off the outstanding balance.
This is the part where the terms and conditions of life insurance can help. By naming the signers as life insurance beneficiaries, they can provide the financial benefits of life insurance, including death insurance, and they may need help paying off unpaid debts.
Life Insurance Can Help Your Family Keep Your Home
Life insurance can also protect your family’s home. If your spouse co-signed on your mortgage, they can use the payments on their life insurance policy to pay off your mortgage each month.
Even if you are the sole owner of the home, having life insurance can ensure that the person who inherits your home after your death, such as a large child or parent, will continue to bear the property taxes, maintenance costs and other financial obligations that result from owning the home.
After all, protecting your family home is one of the best benefits of life insurance. And if you still have mortgage debt, it’s much more important to enforce your life insurance policy.
Life insurance can help your partner pay for your car
Many people don’t think about what happens to their car when they die, but long-term life insurance can help a spouse, partner or loved one pay off their car loan as well as the monthly insurance and other expenses associated with owning a car.
At worst, the biggest problem families have to worry about is that someone will end up repossessing your car. If your car is a family car, that’s double the cost. If your partner or spouse no longer has access to the car, ask them where their child should go and see if they plan to continue paying for the car.
Life insurance can help your family cover your final expenses
If you have a lot of debt, especially if you have credit card debt, you may not have much cash left over at the end of each month. You probably don’t have as much money for unexpected expenses as you expected, and you may not have saved up enough money to cover the final costs of a funeral, memorial ceremony, memorial service, or cremation.
The fact is that many people use life insurance as a way to provide their families with the funds they need to cover final expenses. Especially if they don’t have enough money saved up for the services they need. If your repayment plan takes precedence over your savings plan, use life insurance to fill the gap and help your family cover the costs associated with the term.
Life insurance can be a legacy for loved ones
Life insurance is another way to help you when you are in debt. It is done to help you leave a legacy to your loved ones. Many people want to help their families add to their generation’s wealth, but not everyone has enough money to leave important financial gifts to their children. The more debt you have, the less likely you are to save money to help your children go to college or pay for their home as a down payment.
With life insurance, you can make the kind of financial gift that will benefit your loved ones not only now, but for generations to come. You may pay off your debt tomorrow, or it may take years to pay off your debt in full. But by signing up for affordable life insurance today, you can take the first step toward a better financial future.