In 1974, my grandmother experienced a terrible loss that would change the rest of her life. She received a phone call from a friend that my grandfather had been in a dirt bike accident and was in the hospital. He suffered a head injury and was in a coma. He never recovered and passed away ten days later. My grandmother was 34 years old and widowed with three children under the age of ten. She did not work at the time and had no family living nearby. Luckily, my grandfather had been buying life insurance policies over time. These policies allowed my grandmother to move closer to family and only work one day a week as a Librarian. The life policy allowed each child to go to college and start their life after college as well. With this, my grandmother was not only left money to support her children, but the ability to support herself for the rest of her life. This insurance has helped my family greatly over the years. Had my grandfather not purchased this before his death, my grandmother would not have had the faith and security to continue. Not only my grandmother, but my aunt, uncle, and mother along with their families would not be where we are today. We were provided with a sure foundation in the midst of suffering.
Life insurance is a type of insurance that pays out a sum of money after the death of the insured person or over a set period of time for the family of the insured individual. This is also known as the “Love Insurance”. Buying the insurance is an act of love for one’s family and their loved ones. There are many specifics to life insurance versus property and casualty. Most notably are the emotional ties a family has in the event of a loved one passing and being overwhelmed with these emotions at such time when many decisions will need to be determined in a short period. The purpose of life insurance is to provide the financial needs for final expenses, such as burial and legal fees, medical costs and other basic needs at death. As for the financial decisions, life Insurance, if in place, can smooth the transition and help guide a family or business through the strenuous recovery time.
The mechanics of Life Insurance are to provide the financial needs for final expenses, legal fees, attorney fees, medical cost, burial and other basic needs at death. As for other insurance, say the loss of a car or home, should an individual fail to provide coverage for those items he or she will always have a second chance to do so. With life insurance, there are no second chances. Once a death occurs or even the history of a life-threatening disease, you may not be able to ever again purchase additional life insurance. The risk is too high for a life company to accept. For example, a family friend recently learned she had breast cancer. She had a DNA test for the breast cancer gene for the benefit of her daughter and granddaughters. She was asked at her testing by the administering nurse if she had life insurance. It was thought unusual for medical personnel to ask about life insurance. She was informing our friend that should this test come back positive, it was very unlikely she would be able to purchase life insurance again. The same can be said for a business. The proceeds of a life policy mean the continuation of the business. Partners in a business should have life insurance policies on each other. Therefore if one partner dies, the surviving partner will have cash to buy the other half of the business. The company’s obligations can be paid without having to sell the business itself. My father’s manager told me the story of his father purchasing 1400 acres of prime farmland in Missouri. He had made the payments on it for a few short years prior to his death. His father did not have life insurance. If he had, it could have paid off the loan that they could not afford. Subsequently, the farm was lost to the bank. If his father had life insurance, the farm would be in the family today and worth millions of dollars.
For families, life insurance not only provides for final expenses, but it may provide a family left behind a home instead of a mortgage. This may also mean a family would not find it necessary to sell their family business. It could provide funds to run it until they find a buyer to sell to without the pressure of a forced sale, or this could provide a buy-sell agreement with the funds necessary for someone to buy the business and pay the asking price needed. It could also have the value of replacing the deceased person’s income. This provides the possibility of the remaining family living as they had prior to the provider’s death: in the same home, neighborhood, and attend the same schools. Life policies make it capable for the children/grandchildren to be left with provisions for a college education. This allows less interruption and adjustment after the loss and can buy families time and options.
Life insurance is a crucial payment one must consider for a variety of reasons. The end of life costs are there for all of us, and with life insurance, one can prepare ahead for oneself with pennies on the dollar in the form of life insurance premiums. Otherwise, one will pay these costs in full, a dollar for a dollar at the time of death, but this allows any liabilities left from the deceased to be paid off.
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