Since there are certain financial commitments you need to meet throughout life and do contribute in some way to the family income, you need to provide something even in death—to secure the home, help the family meet expenses for a while, protect dependent parents, or secure the children or spouse.
Financial obligations could include funeral expenses, unsettled medical bills, mortgages, business commitments, meeting the college expenses of the children, and so on.
How Much Insurance A Person Needs
How much insurance a person needs would vary, depending on lifestyle, financial needs and sources of income, debts, and the number of dependants? An insurance adviser or agent would recommend that you take insurance that amounts to five to ten times your annual income.
It is best to sit down with an expert and go through the reasons why you should consider insurance and what kind of insurance planning would benefit you.
10 Key Reasons Why A Person Needs Life Insurance
As an important part of your financial plan, insurance provides peace of mind for any uncertainties in life.
1. Life Insurance Correctly Planned Will on Premature Death
Life insurance correctly planned will on premature death provide funds to deal with monies due, mortgages, and living expenses. It offers protection to the family you leave behind and serves as a cash resource.
2. Life Insurance Secures Estate
It secures your hard earned estate on death by providing tax free cash which can be utilized to pay estate and death duties and to tide over business and personal expenses.
3. It has Savings or Pension Component
Life insurance can have a savings or pension component that provides for you during retirement.
4. Life Insurance covers Illness
Some policies have riders like coverage of critical illness or term insurance for the children or spouse. There are certain rules regarding eligibility for riders which you will need to determine clearly.
5. It Improves Your Credit Rating
Having a valid insurance policy is considered as financial assets which improves your credit rating when you need health insurance or a home loan or business loan.
6. Some Policies is Exempted from Creditors
In case of bankruptcy, the cash value as well as death benefits of an insurance policy is exempt from creditors.
7. Life Insurance covers Funeral Expenses
Life insurance can be planned such that it will cover even your funeral expenses.
8. Term Life Insurance has Double Benefits
Term life insurance has double benefits, it protects and you can get your money back during strategic points in your life.
9. It Protects Your Business from Financial Loss
Insurance protects your business from financial loss or any liabilities in case a business partner dies.
10. Life Insurance Maintains Family Lifestyle
It can contribute towards maintaining a family’s lifestyle when one contributing partner suddenly dies.
Conclusion
Insurance is vital to good financial planning and security but you would need to assess your personal risk and long term commitments. Insurance stands a person in good stead throughout life and can be used in case of emergencies during a lifetime by requesting a withdrawal or loan.
IF YOU DON'T UNDERSTAND OR HAVE ANY QUESTIONS PLEASE COMMENT BELOW.
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