Advantages and Disadvantages of Life Insurance

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To be covered, or not to be covered. That is always a complicated question.

If you have a family, what’s more important than their long-term protection—no matter what surprises life has in store? Many assume that getting complete life insurance coverage is the best way to ensure your family’s financial security, and often they’re right.

However, that doesn’t mean life insurance coverage is the right choice for every person and every family. Though coverage does provide plenty of substantial benefits, there are some drawbacks too.

So how do you know if life insurance is the right choice, or if it’s better to skip it altogether? Here are some of the top advantages—and disadvantages—of having life insurance coverage.

The Advantages of Having Life Insurance

Your Family Is Protected

Like it or not, life is unpredictable. As a parent, it’s part of our job to prepare for those unpredictable times. Whether you’re newly pregnant, the supreme soccer mom, or even an empty nester, securing life insurance guarantees your child’s financially secure future.

Losing a parent or partner is challenging enough. Compound that already staggering emotional loss with financial uncertainty and the burden can become unbearable. However, a life insurance payout can go towards mortgage payments, replacing lost income, debts, college, and so much more.

Even if it’s never needed, securing life insurance not only takes a massive weight off your shoulders, but that of your family’s as well. Stop thinking about the what-ifs so you can focus on life’s more important things.

Tax-Free Financial Benefit

If you were to pass away, wouldn’t you want as much money as possible to go towards your family—and not to the government? With a life insurance payout, the money your family receives is almost always completely tax-free, with a few exceptions.

That means if you take out a $500,000 life insurance policy, your beneficiaries will see every eligible penny. However, money transferred to your children through an estate would have a sizable estate tax applied. Arranging for the majority of the payout to be paid out through life insurance essentially means more money for your family.

It’s Easier to Secure Than Ever

Long gone are the days of having to dig up long lost medical reports, or physically shopping around to countless insurance companies comparing quote after quote. 

Today, we can easily compare dozens of high-quality life insurance quotes almost instantly online and through easy-to-use apps—sometimes without even needing a doctor’s visit. With a family to care for, who has time for that?

Disadvantages of Having Life Insurance

It’s Expensive

For many of us, just one more expense can be one expense too many. If you’re living paycheck to paycheck, sometimes it’s necessary to take a gamble and go without something we don’t literally need to buy.

Though you may be surprised at the affordability of life insurance plans, getting life insurance can become even less attainable if you’ve been diagnosed with an illness like cancer, have a chronic health condition, or recently had a drunk driving arrest. Monthly premiums can then quickly skyrocket making life insurance financially inaccessible. 

Life insurance is a wonderful luxury to have, but it’s not worth bankruptcy.

It’s Complicated

Even if acquiring life insurance has become easier than ever, it can still be a pain. Especially if you have extenuating circumstances like poor health or a criminal record, there can be hoops to jump through, health insurance options to compare, numbers to punch, budgets to consider, etc.

As a parent, we already have a million and one new things to figure out constantly. Who’s driving the carpool? Can I fit in yoga? How did Ella’s hands get so sticky? Even if the process of acquiring life insurance has been simplified, it’s still one more thing to do.

It’s Not Always Necessary

Honestly, some of us simply don’t need it. You’ve done the math, researched all possible financial scenarios, and you’re confident in your family’s financial security in the event of your passing—even without life insurance. Why throw money away every month for something you truly don’t need?

But even if your last name’s Hearst or Rockefeller, ensure you’ve crossed all those t’s and dotted the i’s before skipping insurance. Completing an updated last will and testament stating where every allotted dime will go and how it’s to be used is absolutely essential.

For the majority of families, obtaining life insurance is undeniably the best way to ensure complete future financial security. Despite some of the frustrations, if it’s possible to get coverage and you even think it’d be beneficial, it’s almost always worth dealing with the disadvantages.

With JennyLife, it’s also easier and more affordable than ever. Protect your family with premiums starting at low as $5 per month. Download our app today on Apple or Android and get a quote from an A-rated life insurance carrier in minutes. No doctor’s appointments, exams or blood tests needed so you can spend more time focusing on what matters most.

Tom RedingComment