Americans' Top Reasons for Buying Life Insurance – Yahoo Finance

Life insurance helps protects family members and others against the financial impact of the policyholder’s death. While many people don’t have life insurance, it can be a good idea for many others looking to protect their family’s future. Primary earners with families, especially minor children and non-working spouses are among the best life insurance candidates, for example. Those with sizable debts or who wish to leave a financial legacy by supporting charities may also have good reasons to buy life insurance.
To help you with all your insurance and financial decisions, talk to a financial advisor.
Life Insurance Ownership Basics
A life insurance policy is a contract obligating an insurance company, in exchange for a premium, to pay money upon the death of the policyholder. The payment of the benefit helps protects family members and others against the financial impact of the policyholder’s death.
Life insurance can be a boon to survivors and others, but not everyone has or needs life insurance. Just over half of American adults own any kind of life insurance coverage, according to the 2021 Insurance Barometer study published by LIMRA, a life insurance industry marketing organization.
Next time LIMRA does its annual survey, it may reveal that most American adults have no life insurance coverage. life insurance ownership rates have been declining for decades, with no end in sight. As recently as 2011, the figure was 63%. In 1989, 77% of American adults had life insurance coverage.
The decline in life insurance ownership is likely due in large part to shifting social, economic and demographic trends. However, despite the sweeping changes in American life in recent decades that have reduced life insurance ownership, reasons to purchase life insurance endure.
Top Reasons for Buying Life Insurance
The main reason people buy life insurance, according to a 2015 LIMRA survey, is to pay for funeral expenses. The idea is that the proceeds from the life insurance will cover burial costs so that surviving family members will not have to be burdened by the outlay. This reason is cited by a slight majority of life insurance buyers, a 2015 LIMRA said.
The next most important is to cover lost income. Just over a third of respondents to the survey said they bought policies with the express intent that the death benefits would be used to replace income lost if the policyholder died, allowing survivors to maintain their living standard.
Paying off debt, specifically mortgages, is the next most important reason. More than a quarter of policyholders who reporting being swayed by this argument for a life insurance plan for the death benefit to be used to pay off debts when they die. This can be particularly helpful in the case of someone whose spouse has co-signed loans. It can also protect an estate against attempts by creditors to collect money owed to them from the assets in the estate. In the event of a spouse or child with existing student loan debt, it can also be used to rid survivors of that burden.
Transferring wealth to the next generation is next among the top reasons for buying life insurance. Life insurance benefits can be used to pay inheritance taxes on large estates, increasing the after-tax amount remaining to be distributed among heirs. Like a will, the provisions of a life insurance policy can precisely specify which heirs will receive benefits and how much each will get.
Other Life Insurance Concerns
There are many different types of life insurance, and the varieties can have a number of uses. Life insurance can also be used as a way to create a post-death legacy. By purchasing life insurance and designating a charity as a beneficiary, a policyholder can provide important financial support to valued causes.
Business partners are among the most likely to benefit from having a life insurance policy. Many partnership agreements lay out terms of a buy-sell agreement calling for one partner to buy out the other’s share if the other partner dies. Funds to pay for the buyout can be provided by an insurance policy paid for by the company.
The Bottom Line
Life insurance exists to provide financial support to loved ones and others in the event of the policyholder’s death. Those who can best use life insurance include those with minor dependents, those with significant debt, those who want to plan to minimize estate taxes, those in business with partners and those who want to leave a legacy by supporting favored charities.
Tips for Getting Life Insurance
A financial advisor is an excellent source of information and advice about whether to acquire life insurance and how much insurance to buy. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Deciding that you want life insurance is just the first question. The next is how much coverage to buy. SmartAsset’s free online tool uses your location, age, income and other variables to generate a recommendation for the correct amount of life insurance to get.
© Mitchell, © Mitchell, ©
The post Who Needs to Buy Life Insurance? appeared first on SmartAsset Blog.
Plans by European companies to hike wages and pay one-off bonuses to help staff cope with a torrid winter are raising alarm among investors concerned that the extra cost could hurt profits and undermine the region's economy. Stellantis and LVMH are among a slew of companies offering one-off bonuses to most employees to help with surging food and energy bills over the winter. While those payouts are relatively easy for big multinational companies to digest, a bigger worry is that many are also bringing forward negotiations for annual pay reviews or have agreed unscheduled wage hikes.
The Inflation Reduction Act may affect how some beneficiaries want or need to structure their coverage
There are millions of Americans without life insurance. Here are three reasons why you should get a policy right now.
Retirees who have various types of funds, such as taxable and tax-advantaged, can extend the tax savings available in their portfolios by creating a sequence-of-withdrawal plan, Morningstar says. The goal is to first withdraw funds that must be withdrawn because … Continue reading → The post Stretch Your Tax Savings During Retirement With These Withdrawal Techniques appeared first on SmartAsset Blog.
Lithium-ion storage batteries producer Dragonfly Energy Corp completed its business combination with Chardan NexTech Acquisition 2 Corp (NASDAQ: CNTQ) on October 7, 2022. Dragonfly's common stock and warrants are expected to trade on the Nasdaq Stock Exchange under the symbols DFLI and DFLIW, respectively. The transaction generated committed capital of about $250 million in gross proceeds. Dragonfly intends to use the proceeds to accelerate the market penetration of its existing business and com
Aside from runaway inflation, the energy crisis is sucking up capital to guarantee trades amid wild price swings, and this is an increasingly large risk for European financial institutions
Active fund managers make their reputation on helping investors navigate skillfully through volatile markets. But only 40% out of almost 3,000 active funds survived and outperformed average passive funds between June 2021 and June 2022. Here's what Morningstar's semiannual report … Continue reading → The post Active Funds Struggle to Beat Passive Funds: Which Should You Buy During Volatility? appeared first on SmartAsset Blog.
(Bloomberg) — Nissan Motor Co. is ready to invest $500 million to $750 million in Renault SA’s electric vehicle business, viewing the French carmaker’s reorganization as a chance to reshape their decades-old alliance, a person familiar with the matter said.Most Read from BloombergHere’s How Weird Things Are Getting in the Housing MarketScreening Procedure Fails to Prevent Colon Cancer Deaths in Large StudyPutin Threatens More Missile Attacks on Ukraine as Cities Hit‘No Possibility of Reconcilia
(Bloomberg) — Investors are beginning to show signs that any further intervention by Japan to support the embattled currency will have less of an impact than before.One-week implied volatility in the dollar-yen has fallen to trade well below highs seen last month, even as the currency pair closes on 145.90 — a level that triggered a near $20 billion intervention from Japan’s Ministry of Finance. The Japanese currency has fallen for eight weeks in a row, its longest-losing streak since May. “I’
Many long-term investors have championed the 60/40 portfolio, which holds 60% in stocks and 40% in bonds, as a classic investment strategy that can deliver risk-adjusted returns. But Morningstar says that persistent inflation and interest rate increases in 2022 have … Continue reading → The post This Popular Portfolio Strategy Can Actually Make You Lose Money appeared first on SmartAsset Blog.
(Bloomberg) — The crypto management carousel just keeps on spinning.Most Read from BloombergHere’s How Weird Things Are Getting in the Housing MarketThis Is What 7% Mortgages Will Do to the Housing MarketIt’s Official: The Fed’s in the RedThe Most Powerful Buyers in Treasuries Are All Bailing at OnceScreening Procedure Fails to Prevent Colon Cancer Deaths in Large StudyThe latest in a spate of C-suite departures in the sector comes from nonfungible token marketplace OpenSea, where Brian Roberts
Earnings season is almost upon us, and some stocks may have it worse than others. Hre are some ideas to ride out the coming earnings storm.
A strong jobs report helped cement expectations for more steep interest-rate increases, sidelining investors and pummeling markets.
An add-on certificate of deposit, or "add-on CD," is a specialized type of certificate of deposit. It has the same term and withdrawal limits as a standard CD. It differs in that you can add to this account over time, … Continue reading → The post What Is an Add-On CD? appeared first on SmartAsset Blog.
You have just a few weeks to pounce on Treasury I bonds' sky-high interest rate. Also called Series I savings bonds, their interest rate is 9.62%.
Sports reporter Josh Schafer outlines how sports betting sites are reacting to California's vote on Prop 27, as well as how China's COVID-19 lockdowns are still impacting casino stocks.
If you're searching for a low-risk, high-yield dividend stock, this wireless leader could be worth considering.
(Bloomberg) — It should have been a weekend of celebration for billionaire Jack Owoc.Most Read from BloombergHere’s How Weird Things Are Getting in the Housing MarketThis Is What 7% Mortgages Will Do to the Housing MarketIt’s Official: The Fed’s in the RedThe Most Powerful Buyers in Treasuries Are All Bailing at OnceScreening Procedure Fails to Prevent Colon Cancer Deaths in Large StudyOn Instagram, he blew out the candles atop a massive birthday cake dedicated to his blockbuster product, Bang
Anyone who has even been thinking about purchasing a home or car knows interest rates are rapidly rising this year. As the Federal Reserve hikes its benchmark interest rates, the ripple effects spread out to loans and debt assets across the entire economy. For example, risk-free Treasury bonds now offer higher yields than they did last year, which means that more risky forms of debt — like mortgages or personal loans — have to yield their loan owners more to compensate.
Investors need to pay close attention to Ford (F) stock based on the movements in the options market lately.


Leave a Comment