We know that you love your family and want
to do everything in your power to earn a better living for them. However, have
you ever wondered about their financial health when you are no longer there to
provide for them?
Well, more often than not, individuals
forget to provide for the financial well-being of their dependents. As a
result, the dependents are left with little to call their own. To escape such
trouble for your family, we would advise you to take out a life insurance policy.
A Life Insurance policy, primarily, is a
contract entered upon by the insured and the insurance provider. As a part of
which, the insurer promises to pay the beneficiaries of the insured, the
pre-decided policy claim. Also, there are various other life insurance plans
that offer retirement benefits, college fund benefits, and more.
There is a plan for every need under life
insurance which you can use to cover a multitude of financial uncertainties. Here
are five reasons why you need Life Insurance.
1. To Protect Your Family
Home
As we have already discussed, the primary
objective of taking out a life insurance plan is to protect the financial
health of your family. And, one of the significant aspects of economic
well-being is having the right to live in their family home secured.
However, this right can be threatened with
your death if you had taken out a considerable mortgage against the property
and were using your earnings to pay it off. So, you can take out a life
insurance policy against that mortgage to pay it off in case of your
unfortunate and untimely death.
For such situations, you can either take
out a Decreasing Cover policy or Level-Term policy. While the cover of the
decreasing cover policy keeps on reducing with the decrease in the amount of
mortgage, the benefits of the level-term policy are paid out when you die
within the term of the policy.
A level term policy is ideal for paying off
interest-only debts after your departure.
2. To Fund Your Children’s
Education
It is your children that are most
vulnerable to the event of your loss, as it can have a heavy impact on their
education and overall development. Therefore, it is advised to provide as much
as possible for the kids when you can. In this way, they will be left with
enough to support themselves when the time comes.
First of all, to support the education of
your children, you need to combat the ever-rising cost of private education in
schools, colleges, and universities. For this, you can take out a Maturity Life
Insurance policy, which will payout when your children reach maturity. They can
use this money to pay for tuition fees and support their adulthood.
Furthermore, when you have life insurance
in place, the payout will help them to cope with the financial strain of losing
a cushion when they are still young.
3. To Protect the
Interests of Your Partner
Often, people forget to put as much value
to the work of their non-earning partners as they should have. As a result, all
the efforts they put into maintaining the household and raising the kids go
unnoticed.
While this might not cause a lot of ado
when you are around to take care of your spouse financially, who will provide
for their well-being after your departure?
Therefore, you need insurance to protect
the life and expenses of the non-earning partner.
Furthermore, there is a ton of invaluable
support that you get from your non-earning partner that needs to be insured
too. Therefore, to secure your family against the financial burden brought in
by the death of your spouse, you need to get their life insured also.
4. To Fund Your Retirement
When you are considering retirement
options, you need to prepare your finances for the worst-case scenario. Even if
you have an employee benefits programme that is paying you the pension, you
should check if it will support your spouse after your death too. If not, you
should have a life insurance plan in place to help your partner after your
death.
It is not only the expenses that will fall
upon them later into the life that needs to be covered. You also need to make
provisions for the funeral expenses because they can be pretty expensive too.
For this, you can take a 50+ Life Cover which will provide enough for your
family to organise a peaceful ceremony after you pass away.
5. To Create an
Inheritance for Your Children
While you do not have enough assets to
provide as an inheritance to your family, you can always invest in a life
insurance policy that pays out enough to pass on as inheritance.
You can name your heirs your beneficiaries
so that they receive the claim of the policy and can use the money to start a
life of their own.
Apart from an inheritance, the life
insurance policy payouts can also be used to cover your family’s finances
against inheritance tax. Inheritance tax is charged against the value of estate
or assets one inherits, the amount of which can dig a hole into the finances of
the recipients.
Conclusion
Therefore, you need life insurance to cover
your family against the burden of inheritance taxes when you leave behind an
estate.
Now that you know why you need Life
insurance, you should also know that its cost is calculated on the basis of
your age, health, and lifestyle habits. The healthier you are, the lesser will
be the premium. Also, you can take out mortgages on whole life policies as
their claim is certain to be received when the insured dies.
At the end of the day, it is the peace of mind that you are looking for from your life. And, by having your family’s finances taken care of, you can achieve that. All you need to do is make sure that you apply for the right life insurance plan as early as possible for the best benefits.
