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10 key reasons why a person needs life insurance
by : Paul Wilson
Insurance is designed to protect a person and the family from
disasters and financial burdens. There are many kinds of
insurance of which, the basic and most important is considered
to be life insurance. It provides for the dependants after your
death.
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
dependant 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 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.
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
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. 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. Life insurance can have a savings or pension component that
provides for you during retirement.
4. 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. 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. In case of bankruptcy, the cash value as well as death
benefits of an insurance policy is exempt from creditors.
7. Life insurance can be planned such that it will cover even
your funeral expenses.
8. Term life insurance has double benefits, it protects and you
can get your money back during strategic points in your life.
9. Insurance protects your business from financial loss or any
liabilities in case a business partner dies.
10. It can contribute towards maintaining a family's life style
when one contributing partner suddenly dies.
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 life time
by requesting a withdrawal or loan.
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