Insurance is designed to protect a person and his or her family from disaster and financial burdens. There are many types of insurance, the most basic and important of which is life insurance. This insurance covers your survivors after your death.
Since certain financial obligations must be met throughout life and contribute in some way to the family income, it is necessary to provide for something even in the event of death: insuring the home, helping the family meet expenses for a period of time, protecting dependent parents, or insuring children or a spouse.
Financial obligations may include funeral expenses, unpaid medical bills, mortgages, work obligations, coverage for children’s college expenses, etc.
The amount of insurance a person needs will vary depending on lifestyle, financial needs and sources of income, debts, and number of dependents. An insurance advisor or agent will recommend that you purchase insurance equal to five to ten times your annual income. It is best to sit down with an expert and discuss why you should consider insurance and what type of insurance plan would benefit you.
As an important part of your financial plan, insurance provides security against all of life’s uncertainties.
A well-designed life insurance policy provides funds to cover debts, mortgages, and living expenses in the event of premature death. It provides protection for the family you leave behind and serves as a source of cash.
It secures your hard-earned assets in the event of death by providing tax-free cash that can be used to pay estate and inheritance taxes and cover business and personal expenses.
- Life insurance can have a savings or annuity component to provide for your retirement.
- Some policies include additional insurance, such as critical illness insurance or term insurance for children or spouses. There are certain driver eligibility rules that you need to clearly establish.
- Having a valid insurance policy is considered a financial asset that will improve your credit rating if you need health insurance or a home or business loan.
In the event of bankruptcy, the cash value and death benefit of an insurance policy are safe from creditors.
Life insurance can also be scheduled to cover your funeral expenses.
Term life insurance has a dual benefit: it protects and you can get your money back at strategic times in your life.
It protects your business from financial loss or liability in the event of the death of a business partner.
- It can help maintain a family’s lifestyle if one of the contributing partners dies suddenly.
Insurance is essential for good financial planning and security, but personal risk and long-term commitments must be assessed. Insurance provides for a person’s needs throughout their lifetime and can be used in the event of a lifetime emergency by requesting a payout or loan.