*Guest blog post
Financial concerns are among the biggest sources of stress. In the United States, one in four people feel depressed about their finances every month. This is called “debt depression,” a newly named mental health diagnosis caused by financial troubles.
Research has found that those suffering from financial stress and debt depression are four times more likely to fall sick. They may experience stress-induced physical problems (like muscle tension, headaches/migraines, digestive issues, high blood pressure, compromised immune systems, and heart arrhythmia) and mental health symptoms (like fatigue, sleeplessness, and anxiety).
Thankfully, when financial concerns take place, insurance may act as a safety net. With this, people can prevent getting emotionally stressed, promoting optimal well-being. Here’s how insurance can support one’s wellness, both financially and physically.
Financial Protection
Life insurance helps protect your family’s future financial stability if something happens to you unexpectedly. It can protect your family from daily costs, unexpected expenses (like medical bills or funeral costs), and outstanding debts, which may not go away even after one’s death. While savings can help, this financial protection can help mitigate financial burdens since its coverage lasts several years or even decades.
Access to Emergency Funds
Apart from income replacement, life insurance comes with cash value. It’s the profit you get from allowing your insurer to reinvest your life insurance policy premiums. It grows tax-free throughout your policy’s life, serving as another additional financial security. Should your family need emergency funds for any temporary financial needs or unexpected expenses, the cash value can be borrowed through policy loans or withdrawn.
Supplemental Retirement Income
The built cash value may also act as a supplemental source of your retirement income. You can use it to add to your daily living expenses after retiring, or reinvest it, such as purchasing an annuity (a guaranteed income for you or your family throughout your retirement). Purchasing income annuities enables you to put funds in a tax-deferred account that disburses regular payments as an ongoing retirement income stream.
Health Benefits
Life insurance coverage can be personalized to give you health benefits alongside financial stability. These offers are called “life insurance riders.” They can give added financial protection if you get a critical illness, become disabled, or need long-term care. For example, a critical or chronic illness allows you access to your death benefit even if you’re still alive as long as you’re diagnosed with a qualifying health condition defined by your policy.
Other riders may also offer a “waiver of premium,” which prevents your policy from lapsing if you can’t pay premiums due to injuries or disabilities. Another rider is called “accelerated death benefit,” also named as terminal illness rider, which gives you access to a portion of the policy’s death benefit, usually if you only have less than a year or two to live.
These riders may sound saddening, but they can be of great financial help should these worst situations happen to you.
How to Get Affordable Life Insurance?
The most inexpensive way to buy life insurance is to do it earlier, ideally in your twenties. Choose one that fits your lifestyle and offers a good face value. But what is life insurance face value? It’s simply the worth of your policy or the money your beneficiaries may receive if you pass while the policy is still active. Having these ensures that you get the most out of your policy.
Life insurance companies offer lower rates to younger and healthier clients because they’re likely to:
have a longer life expectancy
haven’t been diagnosed with a serious disease
pay premiums over a longer number of years
If you’re not that young anymore, consider working at a company that offers group life insurance as a work perk. It’s relatively inexpensive than individual life insurance because employers usually pay all or most of the cost.
However, you’ll lose access to group life insurance when you leave a job. When this happens, you have three options:
cancel the policy and apply for a new one;
port the policy to another group plan with a new employer; or
convert the policy to an individual life insurance policy.
The most affordable option is the second. Like earlier, the new employer still covers all or most of the insurance costs. If you can’t port your coverage, the next cheaper option is to convert the group policy to an individual policy, but only if your plan permits. With this, paying your premium is your responsibility since you’re not part of any company’s plans anymore.
Still, it’s more cost-effective than applying for a new one. To know more about your options, better speak to a human resources representative or benefits specialist.
How Much Life Insurance Do I Need?
There are several factors that determine how much you should invest in life insurance. These usually include age, income, debt, family size, and future goals. If it’s hard for you to learn about various rules of thumb and work through a series of logical steps to help you arrive at a specific coverage amount, it’s always recommended to seek professional help.
However, generally, the larger the coverage amount, the more benefits you and your family can realize when needed.
Final Thoughts
There are several types of life insurance designed to meet different unique needs. However, they all have one similar ultimate goal: to give you financial confidence, provide your family with financial readiness and stability in your absence, and promote overall wellness.