According to the National Funeral Directors Association, paying for a funeral costs around $8,000 out of pocket. Not to mention, many end-of-life necessities can cost around $12,000. 

A good life insurance policy can help manage those expenses. Life insurance ensures that those left behind can afford your funeral and any other expenses without going into debt or dipping into their savings. In other words, life insurance is something that you can’t afford to ignore.

What Is life insurance?

A life insurance policy is a legal contract between the insurance company and a policyholder. In this contract, a certain amount of money will be listed, as well as named beneficiaries. Whenever the policyholder passes away, the money described in the contract will be paid to the named beneficiaries.

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The point of life insurance is to provide money for the beneficiaries to pay for the funeral arrangements and remain financially stable after the policyholder’s passing. In other words, it is simply a way to make the passing easier and less stressful.

Most life insurance policies will require you to take an exam to evaluate the risk associated with the likelihood of your death. However, there are no exam life insurance policies. A no exam life insurance is a policy you can sign up for without a full medical exam.

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Who needs life insurance?

Not all Tahoe residents need life insurance, but it is something that some people absolutely need. For example, parents with small children absolutely should pay for life insurance. The money will help the children remain financially stable if the parents should pass before the children can care for themselves.

Similarly, any parents with adult children who have special needs should pay for life insurance as well. The life insurance policy will help adult children get the proper care and medical resources they need after the parents’ passing.

Even if you have adult children who do not have special needs, it’s a good idea to take out a life insurance policy. A life insurance policy prevents your adult children from spending an excessive amount of money on your funeral arrangements and any additional costs.

Parents are not the only people who should pay for life insurance. Any adults who own property together should both take out life insurance policies. These policies will ensure that both partners have some financial help after their partner’s passing. For example, a couple with a joint mortgage should have life insurance policies.

There are a couple of other instances when it could be beneficial to have a life insurance policy. For example, it is a great idea to have a life insurance policy if you expect to have estate taxes after you pass away or if you are married and receiving a pension.

Types of life insurance policies

There are different types of life insurance policies as well. You will select a policy based on your needs and income. Here are the most basic types of life insurance policies:

• Term Life: Lasts a set amount of years before ending.
• Level Term: Premiums cost the same amount every year.

• Increasing Term: Premiums increase as you get older.
• Single Premium: Policyholder pays premium monthly, quarterly, or annually.
• Permanent: Lasts the policy holder’s entire life until they stop paying or surrender the policy.
• Whole Life: A permanent life insurance that accumulates a cash value.
• Universal Life: A permanent life insurance that earns interest. The premiums and benefits can be adjusted over time.
• Guaranteed Universal: A universal life insurance with lower premiums that does not build up cash value.
• Variable Universal: Policyholder can invest in the cash value of the policy.
• Indexed Universal: Allows the policyholder to earn a return on the cash value.
• Burial Expense: A permanent life insurance with a small death benefit.
• Guaranteed Issue: A permanent life insurance that is available for people with medical issues.

Final thoughts

Provide your loved ones and family members with financial stability by investing in a life insurance policy. A life insurance policy will help them take on funeral expenses and any other payments without going into debt or withdrawing from their savings. In other words, it helps your loved ones to grieve your loss without the added stress of finances.