Reasons for Life Insurance Differences Explained

6 Reasons to Buy Whole Life Insurance or Term Life Insurance
Securing quality term or whole life insurance coverage is
important, especially if there are people in your life
whose financial stability depends on your income. Many
financial experts even consider life insurance to be the
foundation of sound financial planning. Find out six
reasons why you should purchase whole life insurance or
term life insurance to protect your family and loved ones.

1. Income for Dependents
If people in your life depend on your income for financial
support, having a whole life insurance or term life
insurance policy in place will protect them in the event of
your death. Life insurance can replace your income for your
dependents so they aren’t left bearing the financial burden
of an income lost through death. This applies most often to
parents with young children, but is also applicable to
couples if the death of one partner would leave the
survivor financially stricken. If your parents, adult
children, or siblings are your dependents, life insurance
can also provide replacement income to benefit them. And,
if your surviving spouse or domestic partner’s government
or employer-sponsored benefits will see a reduction after
your death, having life insurance to replace your income
can definitely be useful.

2. Coverage for Final Expenses
Funeral and burial costs can be expensive, but your life
insurance can cover the costs. Carefully planned life
insurance will also provide funds to cover mortgages and
other expenses. Debts and medical expenses not covered by
health insurance can also be covered by your life
insurance. Life insurance offers protection to the
dependents you leave behind, since it can sometimes be
utilized as a cash resource.

3. Create Inheritance
Life insurance can allow you to create an inheritance for
your immediate relatives or heirs. Even if you don’t have
any other significant assets to pass onto your surviving
family or loved ones, you can create an inheritance by
naming your heirs as beneficiaries in your life insurance
policy.

4. Pay Estate Taxes
Rather than leaving your surviving family to take a smaller
inheritance or do away with some assets, have a quality
life insurance policy in place so the benefits can pay
estate taxes. Some life insurance plans provide tax free
cash that can be used to pay estate taxes and death duties.

5. Create Source of Savings
Your life insurance can become a sort of savings plan since
some types of insurance can create a cash value that is
available for withdrawal upon the owner’s request. Another
benefit of this “forced” savings plan is that the interest
credited is tax deferred, and if the money is paid as a
death claim, the interest can be tax exempt (www.iii.org).

6. Make Charitable Contribution
By naming a charity as a beneficiary of your life
insurance, you can make a larger contribution than if you
donated the cash equivalent of your policy’s premiums.
Donating a term life insurance policy allows you to deduct
the cost of the premiums from your taxes. And, if you
donate a whole life policy, you can deduct the cash value
of the policy and the cost of the whole life insurance
premiums. In both cases, after you die, the charity you
select gets the insurance policy proceeds.

Plan ahead and ensure that you have a quality life
insurance plan in place to protect your family.

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Ryan Patterson is president of US Insurance Online, based
in Austin, TX. He graduated in 2000 from the University of
Texas with a combined business and computer science degree,
and started US Insurance Online in May of 2005 with fellow
entrepreneur Jim Waltrip. Visit
http://www.USInsuranceOnline.com for help shopping for
insurance and for free insurance quotes.