When Setting Your Budget, Don't Forget Life Insurance
Death is an uncomfortable thing to talk about, and insurance isn't much better, but when you consider the average American's debt you'll soon realize life insurance is a must. When you die, all of your debt has got to go somewhere, and according to Nerdwallet the average American's total household debt is $132,500. Did you just graduate and don't have a mortgage yet? The average household student loan debt is $49,042. Perhaps you don't have student loans or a mortgage -- the average credit card debt is $16,061, and the average auto loan debt is $28,535, and we're not including medical or funeral expenses. So where does all that debt go? It depends. If you elect to give a family member a piece of property, they'll most likely inherit the debt you owe on it. If they choose that they don't want it, they can sell it and cover what you owed on it -- that's assuming that the property sells and has not depreciated beyond the sum of the purchase price plus equity. The same is true for vehicles, but as fast as new vehicles depreciate, it's very easy to get upside down on a new car loan and pass that along.
Where it gets really unfortunate, however, is if your parents helped you co-sign a student loan. Then they are on the hook for the money, and your diploma is worth about as much as the piece of paper it's printed on. If you add credit card and other forms of debt to the mess, the burden quickly balloons. This is the kind of thing that tears families apart, and that's why it's important to have life insurance. The best part is, there are ways to use life insurance to grow your wealth and protect your loved ones. It's called a cash-value life insurance policy, and it has some serious benefits. Not only will the money you contribute be there to cover your policy and your family, but it will actually appreciate in value. Think of it as a savings account that yields a higher return on the money while you pay your premium, and you can withdrawal the money whenever you need it. Or, if you're making a really big purchase, you can borrow against it. For more information on how to use this to your benefit, contact a financial or insurance professional.