According to Futurity First, life insurance is an important asset because it provides financial protection for the beneficiaries, helping pay for funeral expenses, pay-off debts that could be assigned to the estate and providing living expenses to any dependents. Life insurance can also be used to protect a business from the devastating loss of a key employee, provide an emergency cash fund, create a supplemental retirement plan and provide peace of mind.
The death benefit is the benefit paid to the beneficiaries upon the death of the insured. It is important for individuals to carry a life insurance policy because death can happen unexpectedly due to an accident or illness. Individuals are better off when they purchase life insurance policies at a young age. Premiums are less costly and they are less likely to be medically disqualified.
Forbes notes that once an individual is diagnosed with certain health conditions, obtaining many life insurance products becomes impossible. Whole life insurance policies also build a cash value over time. The earlier in life a person takes out the policy, the more time the cash value has to grow. This cash value can be tapped in a financial emergency. A life insurance product called an annuity can also be purchased. An annuity is a self-funded pension plan.