What’s Life Insurance For, Anyway?

The three main reasons for life insurance

When you think about life insurance, what comes to mind? Do you think about covering funeral costs? Or do you think about the impact life insurance could have on your family?

If you’re thinking this way, it’s a good start. In the simplest terms, there are three main reasons someone needs life insurance.

1. The first reason, and what people think of most commonly, is to cover funeral costs. The average funeral today can easily cost your family $15,000 or more.
2. The second reason is to pay off any immediate debt. This includes, but is not limited to, your mortgage, your vehicles, education loans and credit card debt. If you are planning on funding your kids’ college, this could also include a college fund. Most revolving debt is not forgiven in the event of a death.
3. The third reason, and what is most commonly overlooked, is replacing your income. The most valuable financial asset you bring to your family is your ability to make money. This is especially true if you have children, or if you are your family’s breadwinner. Without incorporating income replacement into your overall life insurance picture, you could inadvertently add financial hardship on top of tragedy. If you make $50,000 annually and are 30 years away from retirement, that’s $1.5 million of expected earnings that factor into every financial situation you’ve made as a family.

If you aren’t married or you don’t have children, debt or a mortgage, life insurance can still be an important part of your financial situation — it can be used for estate preservation and maximization, keyman insurance, buy-sell agreements and much more.

Dying isn’t fun to talk about. I’ve never met a member who enjoys talking about it. That’s human nature. But sometimes the toughest discussions are the most valuable.

Whether you are 18 or 80, chatting with a Knights of Columbus Field Agent can be extremely valuable for you and your family. Knights of Columbus Field Agents are highly trained and deeply committed. In today’s ever-changing economy, you can find comfort in the financial strength and security of Knights of Columbus Insurance. According to Standard and Poor’s, there no life insurer that’s more financially secure.*

Find an agent near you. Visit www.kofc.org/findagent.

Originally published in a special bi-weekly edition of Knightline, a resource for K of C leaders and members. Access Knightline’s monthly archives.

*Ranking North American Life Insurance Companies from Strongest to Weakest by S&P Global Ratings. April 6, 2020.