We all love our family very much. When an accident happens to someone, we all share in their grief. But in life death is a reality for everyone whereas we may not like to think about death. It sometimes comes on very quickly, causing emotional pain as well as financial hardship. Emotionally everyone supports your family but financially no one supports. Having life insurance is very important to support you financially. But people often do not understand why this is necessary.
If you are married and your children and your family depend on you financially, having life insurance can be important. Life insurance provides a death benefit to your chosen beneficiary after your death. It can help your loved ones get access to money when they need it, but it can also save your family from financial troubles.
Life insurance can often be confusing. Many people know what it is, but they aren’t really sure why they might need a policy. Life insurance can be very important if you want to help ensure that your family continues to have an income and be able to better pay off debt after you are gone. Let us know what is life insurance and why it is important for you.
What is Life Insurance?
A life insurance policy is an agreement between an insurance company and a policy owner. Each life insurance policy works differently. As per the life insurance contract, for the life insurance policy to remain in effect, the policyholder has to pay a single premium in advance or pay regular premiums over time. If the policyholder dies during the policy term, the death benefit is paid to his dependents.
Why Life Insurance Is Important (5 Reasons)
Every person is an important part of his family in his life. Life insurance can be very important if you want to help ensure that your family continues to have an income and be able to better pay off debt after you are gone. Here are four reasons why life insurance is important.
1. To Protect Your Family
Life insurance is there to help protect your family’s financial future. It may sound obvious but many people do not have enough life insurance to provide long-term protection. Even if you do have savings, it’s unlikely that it will be enough to cover your family’s expenses for many years or even decades if something unexpected happens to you.
If your family is your only dependent on you, there is a good chance that you need life insurance. If you are the only wage worker in your family, your death will leave dependents without a significant source of income. The result can be a major impact of financial difficulties that last for years. That’s because lost income makes it harder to save for goals like education, which can mean kids enter the workforce with heavy student debt. That’s why talk to a life insurance expert today who can help you create a plan that will protect your family.
2. To Pay Off Your Debts
When someone dies in life, the family members have to go through a lot of pain. And not everyone wants to associate them with the burden of extensive debt. Millions of Americans today have outstanding mortgage and student loan debt. Millions of people have credit card debt. It’s not something you want to pass on to your spouse and kids. Everyone wants to give happiness to their family and you can give them this happiness with life insurance policy.
Though it can be unpleasant to think about while living, and many beneficiaries will not even think about it after their family member passes away. But sooner or later the bills will be due. Thankfully, with a life insurance policy, your loved ones will be able to continue making payments even in your absence. Life insurance can help your loved ones pay off any debt you may have left, including credit card debt, business loans, personal and/or educational loans, and mortgage loans.
3. To Protect Your Assets And Maintain A Standard Of Living
When you make any big purchase, often you must get insurance to protect it like house, car etc. But in today’s time many people sell big things due to cheap EMI. In such a time, if someone dies, it becomes difficult for the family to maintain that item as well as their lifestyle.
Think about all the things your income currently depends on, not just mortgage and loan payments. Now subtract your income from the equation and see if your family can sustain their standard of living without you. If they can’t do that, you’ll want to make sure you have life insurance of an amount that can sustain them. Speak to a life insurance professional who can help you determine the right amount of coverage you need.
4. To Reduce Your Stress
When a loved one passes away in life, it is always an emotional and stressful time. At such times, if you have concerns about converting income and covering bills, this already difficult period can be more challenging.
While a life insurance policy cannot solve every problem, it can provide your family with a little bit of a buffer to get back on their feet. Knowing they have your death benefit to cover the mortgage, for example, can give your family the time they need to move on at their own pace.
Also Read – What Is Life Insurance | How To Choose Best Life Insurance
5. To Build Your Wealth
Many people have a perception that life insurance is only necessary for financial security but it can provide you with the opportunity of saving along with protection. It is an investment tool that many people play with and grow their income over the years. Permanent life insurance policies can provide financial support for your lifetime as well as after your death.
Permanent life insurance lasts your entire lifetime as long as you pay your premiums, and it builds cash value over time. You can borrow from it tax-free or use it as collateral for a loan. That money can help you achieve financial goals big and small in your lifetime.
Frequently Asks Questions(FAQ’s)
Q1. Which type of life insurance is better?
It only depends on your requirement whether you want term life insurance or permanent. Term life insurance is a better option if you are looking only from the point of view of security. But a lifetime policy can give much higher returns than a term policy.
Q2. How Much Life Insurance Should You Buy?
Buying life insurance depends only on you, how much you want to leave for your beneficiary. People usually buy insurance to cover their mortgage, as their salary backup, and to cover important expenses for their family members.
Q3. Do you really need life insurance?
If your family is solely dependent on your income, then life insurance is most important. Buying life insurance can protect your spouse and children from potentially catastrophic financial losses if an accident happens to you.
The Bottom Line
Life insurance should be the first step whenever you do financial planning for yourself. Life insurance is the foundation of any sound financial plan. With the right type of policy and the right sum assured, one can plan and build their family’s future without worrying about whether they will be present in person to see it or not.
If adequate life insurance is not taken, especially the death of an income earning member of the family, can be a major blow to their financial well-being. Hence this mistake should be avoided and get life cover as soon as possible. The sooner you take life insurance, the lower the premium. So it is always better to get life insurance at the earliest.