10 Reasons You Must Have Life Insurance

insurance, finance

Life insurance is a contract between the insurance company and the policyholder (the insured), where the insurance company guarantees the payment of death benefits to the beneficiary (heirs) at the time of the insured's death. In this case if the policyholder is a father, the heir may be his wife or child.

The purpose of having life insurance is to provide financial protection for families left behind after the policyholder dies. Departing from this goal, there are at least some classes of people who most need life insurance.

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.


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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.

Every job has its own risks. But if your type of work makes you prone to work accidents, life insurance must be owned. Especially if you are the main breadwinner whose income is needed by the family.

Types of jobs that require life insurance such as pilots, sailors, soldiers, contractors, jobs that make you travel a lot out of town or abroad, as well as other jobs with the risk of loss of life.

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.

Life is a long journey and requires good planning to create a peaceful, prosperous and happy life for you and your family.

If you have a family, you must consider everything in order to avoid the undesirable. An example is an unexpected financial loss due to sudden death, total permanent disability, or unproductive conditions. As a result, you lose your source of income or cannot meet the ever increasing costs, such as for your children's education.

So, careful planning is needed to avoid all these risks which one of the best ways is to have life insurance.



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