Let’s admit it; most of us understand the importance of taking out life insurance but underestimate the impact of our passing away on the lives of our loved ones. Without the right protection, your passing would have a devastating effect on your surviving family members, especially if you’re their breadwinner.
What is life insurance?
Life insurance is a type of policy that pays out regular payments or a lump sum to your dependents when you’re gone. By taking out life insurance, you’re simply prioritizing peace of mind. You can rest easy knowing that your dependents will be taken care of should you pass away.
There are several variations of life insurance plans, but generally, they can be categorized into either term or whole of life policies. Whole of life covers are more expensive than their term counterparts. They also guarantee that your beneficiaries will get compensation as long as you pay your premiums until the end.
Understanding how each policy works is key in helping you choose the most suitable cover for you and your loved ones.
How does life insurance work?
The principle behind life insurance is quite straight forward. When you buy a life insurance policy, you can choose to pay monthly, quarterly or annual premiums to your insurer. The premiums are dependent on factors such as your age, length of the contract, state of health, and the amount insured.
Should you pass away within the contract term, your loved ones will receive a death benefit in the form of installments or lump sum from the insurance provider.
Is life insurance a good idea?
The simple answer to this question is, it depends on your situation. But generally, a life insurance policy is a good idea. Here are four reasons you should consider taking out a cover;
Life insurance helps you provide for your kids
Raising kids is often an expensive affair, particularly when the family depends on one person’s income to cater for most of the expenses. There are countless sad stories about children whose lives changed for the worse when the parent who took care of the bills passed away. Think of it this way, what would happen to your family if your income was taken away from them today?
Purchasing a life insurance policy can help ensure that your children can pursue their education and lead a comfortable life if you pass unexpectedly. The death benefit can help to provide for your children as they grow until they can stand on their own.
Insurance helps you pay off your debts
Another valuable benefit of life insurance is that it helps to cover your mortgage and other related payments if the inevitable happens. Debts such as car loans, mortgage, funeral expenses and credit cards can drain your family’s savings in a flash. Luckily, you can use life insurance to ensure your family does not turn into beggars or get evicted from their family home should you go without having cleared your debts.
Insurance offers peace of mind
Life insurance is an easy way to give you and your loved one’s the much-needed peace of mind. Just the thought of knowing that your dependents will be protected if the inevitable happens allows you to rest easy. You don’t have to be worried about the financial future of your family when you are gone.
Life insurance policies are designed to provide some form of financial assistance to your family and mitigate the impact of your death by allowing them to continue with their current lifestyle.
Insurance protects your business
A life insurance policy can protect different aspects of your business. For example, you can take out a cover to protect your business against the impact of the death of a key employee or partner.
This makes life insurance such a critical asset to your business. Choose from the different types of business life insurance policies, including key person cover, shareholder protection, and business loan protection, among others.
To this end, it’s a no-brainer that purchasing a life insurance policy is a great idea and something everyone needs to consider. This cover not only provides financial support to your loved ones but also allows you to rest easy knowing that your beneficiaries will be taken care of once you’re gone.