When someone dies, those left behind can struggle to pay off debt, replace that lost income, cover burial costs and more. Investors purchase life insurance to address those financial concerns and take care of their loved ones. While the amount of life insurance needed varies by family, buying a million-dollar life insurance policy is the goal for many investors. You can work with a financial advisor to determine how much coverage you need and what your options potentially are.
Why Do People Buy Life Insurance?
People buy life insurance for many different reasons, most of which are personal to their personal or financial situation. However, it generally boils down to taking care of those financially affected by their death. Let’s take a look at five of the most common reasons people buy a million-dollar life insurance policy.
1. Replace Lost Income
When someone passes away, they no longer earn money from their career. In many cases, households need income from both spouses to meet their monthly expenses. Life insurance proceeds help to replace lost income from the person who passed away.
2. Pay Off Debt
To alleviate the financial stress of someone passing away, paying off the debt that affects the family’s money can make sense. Examples of these debts include a home mortgage, student loans, credit card balances and business loans. Using life insurance to pay off those debts eliminates stress and monthly payments.
3. Paying for College
Many parents want their children to go to college and plan to cover some of the cost of tuition. For some families, those plans get interrupted when a death occurs. Life insurance helps to keep the dream of college alive and helps your children build a brighter future.
4. Buying Out