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Nearly everyone has heard of life insurance – and most people know that they should consider buying it. But 95 million US adults – or 41% of the adult population – don’t have any life insurance coverage at all.

Some employers offer group life insurance policies, but it is important to remember that while those provide an important benefit to the employee, the coverage may not continue if the employee leaves the company. At that point, the individual is older and may have developed health factors that make securing an individual life insurance policy more difficult and more expensive.

Life insurance is not something to take care of once and then forget about it- there are different products and vehicles to achieving your goals- and these goals are very likely fluid, changing as your life changes. So take a look at the list below- some of these reasons to buy life insurance may apply to you now- and some may apply later.

So why is life insurance so important? Here are 5 important reasons that life insurance should be important to you. Next week – 5 more reasons. (Yes – it’s that important!)

1. To create an estate

Life insurance will provide your beneficiary with a lump sum of cash. In most cases, this death benefit is income tax free. Immediate, liquid dollars – benefits don’t get much better than that.

2. Replace lost income

Anyone who depends on another individual for income contribution to the household should consider life insurance as protection from the loss of that income. What income does your family need to continue the life to which they are accustomed? How will they pay the mortgage or rent? How will they pay the grocery or utility bills? If you are a stay at home parent – How will the surviving spouse pay for child care so that they can continue working? While there is no one way of determining how much life insurance you should buy, many experts recommend that you purchase at least 10 times your annual salary for loss of income purposes.

3. Pay off a home mortgage

For many people, their home is their largest asset. Many people would like to pass the family home to their spouse or children free of any mortgage. If you are like many people, you don’t want your surviving spouse or family to have to worry about where they will be living. Selling a home these days is also no guarantee – and if your family needs to sell the house quickly in order to secure money, they will likely have to sell the house at a lower price. Dealing with the loss of a loved one is difficult enough without having to risk losing the family home.

4. Provide an education fund

Some life insurance policies accumulate cash value over time. As the cash value increases, these funds can be used to fund college – or, the death benefit could be used to fund this expense if the parent should die prematurely. A grandparent can also ‘gift’ the premium on such a policy to help pay for a grandchild’s education.

5. Final expenses

It’s expensive to die! The average cost of a funeral is about $10,000-$15,000- and that is without any frills. Planning a funeral is emotional and stressful enough without your loved ones worrying about how they will pay for a funeral.

There are different kinds of life insurance that can meet these needs – but that discussion is reserved for another post. The first step is recognizing why you need life insurance in the first place. Once you’ve identified your personal needs, meet with your licensed insurance professional to discuss the different options that are available to meet your objectives.

The most important time to think about life insurance is NOW- before you – or your family- really needs it.

Kathleen Tagge, CIC is a licensed independent insurance agent in Illinois. She enjoys working with clients to mitigate business and personal risk through proper insurance coverage before problems arise. Kathleen became an active advocate of life insurance when her daughter was born – all of the 5 reasons listed above became relevant and important!

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