When considering purchasing a life insurance policy, the extra cost per month can be hard to justify. However, what would happen without life insurance? It is important to consider what your life would look like if you did not have a way to financially protect your loved ones.
Why life insurance?
Life insurance is valuable because it can give your loved ones peace of mind that they do not have to change their lifestyle to cover all of their monthly expenses.
The purpose of life insurance is to replace income, so if one income is lost, it can be hard to replicate the same amount of income you used to have, causing you to take extraordinary measures.
Here are 4 scenarios that could happen without life insurance:
- You may have to sell your home
If you do not have life insurance, your beneficiary may have to sell assets to make ends meet.
A large asset that could generate a large amount of money is a home. If you own a home, the beneficiary could sell it and move to another home that is more affordable monthly. However, this would not only cause you to lose any equity in the home, but displace your family.
Instead of being able to carry on with their lives as normal, they now have to pack up their belongings and move somewhere else, which is another added stress on top of grieving.
- You may have to get another job
Depending on the income situation of your family, without life insurance, income will drastically decrease especially if the family member who passed away was the sole breadwinner.
Instead of having life insurance to help replace lost income, you may now be scrambling to find a new job, and if you have not worked in a while, it could be difficult to find something that could pay as much as the income your family previously had.
- You may have to sell possessions
Even if you had life insurance, it may not be enough and could run out within a few years. To get extra money, you may have no choice but to sell your possessions. In an endless cycle of selling possessions for extra cash, it could be a difficult reality to face, especially if these items are sentimental or are something you enjoy having.
- You may have to start fundraising
One of the most common scenarios for those without life insurance is that they start an online fundraiser to help pay for outstanding medical bills or debts.
While this seems like a good idea, you likely will not get the amount of money you need and the money is not long-lasting, meaning it would only be enough to cover current expenses.
On the other hand, having life insurance would alleviate this stress because you would ensure you had enough money to cover your expenses for months or even years.
Life insurance has many benefits, but thinking about the worst-case scenarios is necessary to see the value. Falling into financial hardship can be prevented if you consider life insurance as part of your financial plan.