Is Crowdfunding the New Life Insurance Policy?
Crowdfunding has become a popular means of obtaining financial assistance in times of crisis, including when a loved one has passed without a life insurance policy.
Seeing friends, family, and even strangers pitch in via crowdfunding platforms can be heartwarming when someone is struggling. Financial contributions of this kind may not be sufficient, and they aren't guaranteed.
In spite of that, many people seem to be turning to that approach. On GoFundMe, memorials are one of the most popular categories. There are thousands of requests for financial assistance with funeral expenses, memorial funds, and burial costs. Additionally, you'll find requests for help with household expenses due to the deceased's loss of income. Users can ask their friends, family, and strangers for donations on the site.
There's a better option: life insurance, of course. Crowdfunding raises some serious concerns about life and financial planning for everyone.
Grieving the loss of a loved one is a challenging process. It only adds to the grief when no money is available to give them a proper send-off, let alone care for those who rely on their income. Having to publicly ask for that money compounds the emotional stress of the situation, along with the fear that it may not be enough.
Why wasn't there a life insurance policy in the first place?
People go without life insurance for a variety of reasons.
There are cases in which the deceased was a young child. People who believe their children will not die believe they do not need life insurance and, in most cases, their income is not dependent on them. Losing someone so young is often an unexpected expense, and families do not always have the resources to cover it.
Many crowdfunding campaigns are for young parents who thought they would live for a long time and didn't need life insurance yet. Maybe they knew they needed it to protect their families, but hadn't purchased it yet.
Many people don't buy life insurance because they think they won't qualify or that the premiums are too expensive. Many people underestimate the cost of term life insurance due to a lack of knowledge. You might be able to raise several thousand dollars, even tens of thousands, through a GoFundMe campaign. However, a life insurance policy can pay you several hundred thousand dollars, or even a million.
Those who don't want to think about death also avoid shopping for life insurance.
Why do you need life insurance?
If you have children, a spouse, or dependent parents who would struggle to meet financial obligations without your income, or without your ability to care for them, then you need life insurance. Even if no one depends on you, taking out a small life insurance policy now could ease a lot of your loved ones' stress if you pass away prematurely.
Unlike a GoFundMe campaign, your beneficiaries won't pay taxes on the insurance proceeds.
The majority of campaigns fail to achieve their goals. Less than 12% of medical bill campaigns reach their goals, according to this article.
Your family shouldn't be forced to plead for money online if you pass away.
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