7 Reasons Why Life Insurance is Important

Getting a life insurance policy is one of the essential components of sound financial planning, but the surprising thing is that only a handful of people have acquired this policy. But why is it important? Why should you consider purchasing a life insurance policy?

Well, the bare truth is that no one really knows what tomorrow looks like. While we all hope for a brighter future full of joy, hope, happiness and success, there is the sad possibility of something wrong happening like an accident or illness which might cut short all our life plans and expectations. What then becomes of your family when this happens, especially if you are the breadwinner? Who will cater for their household expenditures? How about your debts? Will they be left struggling to pay those debts?

All these difficult but important life questions can be solved with a life insurance policy. Here are reasons why you should consider purchasing a life insurance policy.

1. Take care of your family

If you are the bread winner or if your family or loved ones rely on you for financial support, then life insurance is even more important, since it substitutes your income when you’re no longer available to offer solutions to their financial challenges.

This is critical particularly for parents who have young children or even adults who may find it extremely difficult to maintain their way of living when they are gone. So, it is important that you have a plan that will cater for all their needs, including, the cost of hiring a helper who will assist in handling their day to day chores such as child care, cooking, laundry, cleaning and everything a young family requires.

2. Take care of your business

Life insurance is not only about family and yourself, it is bigger than that. There are different types of life insurance policy. There are some life insurance that have impressive offers that’ll take care of your business when you’re no longer there. If you are a business owner, your business partners can easily buy off your stake in the business to avoid any gap that may occur when you’re gone. What happens is that, your partner(s) enters into a buy/sell agreement where the business or company payouts will be given to your family nominee but without offering them a share in the company. There are two main types of life insurance policy i.e. life protection/investment plan and a term life insurance policy.

A term life insurance policy usually provides security for a certain specified period of time (30, 20 or 10 years) and will only give out the benefits to your family if you die before the end of the term. The coverage ends and the policy expires when you live past the stipulated policy coverage period.

A life protection or investment policy, on the other hand, provides you with a lump sum amount at the end of the payment duration of the policy. This kind of plan normally provides you with protection but the payout is slightly lower compared to term plans.

3. Take care of your debts and all the other expenses

One thing that you don’t want is to leave behind a debt that your family will struggle with. Any kind of debt, be it personal loans, loan on credit cards, auto loans, and home loan will be catered for if you choose the right life insurance policy. Other expenditures such as burial and funeral charges will also be taken care of. Life insurance basically takes off the financial strain that your children, spouse, parents or siblings would have been left struggling with them.

4. Gives you the opportunity to leave a legacy

Life insurance policy gives you the opportunity to have something to be remembered for long after you are gone. So, if you do not have an asset, or anything of value for your loved ones to inherit, purchasing a life insurance policy and including them as your beneficiary is the perfect gift to leave behind. This is one of the best ways of providing your children with a firm financial foundation for a brighter future, since all of their needs will be catered for.

5. Enables you to attain your long term goals

Another benefit of life insurance policy is that you can use it to realize your long term goals. You see, life policy is a long-term investment tool that you can use to attain some of your future goals like having a good retirement package or building or purchasing a family or retirement home. Additionally, it offers you the option of diversifying your investment portfolio to help you grow and expand your wealth.

Some life policies are linked to investment products that offer dividends depending on their performance. If you decide to choose an investment-linked life policy, it is essential that you carefully read through the fine print so that you are cognizant of the possible risks and benefits

6. It offers a peace of mind

We all know that we will die someday but we don’t when. It could be 40 years to come, tomorrow or even today, so all we can do is to plan for it. Whereas there is nothing that can replace a person, life insurance policy offers protection from life uncertainties. It will to a larger degree offer you and your family a peace of mind as you’ll no longer worry about who will take care of them once you are gone.

7. Tax-Savings

One of the benefits of life policy is that it comes with a Tax relief. This does not only apply to life policy but all the other plans such as education or retirement plans. For every insurance premium you pay, you are entitled to tax benefits. This therefore gives you an opportunity to minimize the high amount of money you pay every year as tax.

In conclusion, Life insurance policy not only provides you with a chance of protecting your loved one’s from life calamities, but it also offers you a disciplined method of saving money and ultimately achieving your long term goals. The most important thing is to identify the right life policy that suits your needs and budget. As time goes by, you family situations, your needs and aspirations may change, and when that happens you may need to re-evaluate plan or policy to suit your changing needs.

Always remember that you’re never too old or too young to purchase life insurance and the earlier you buy it, the better.

What’s next?

You can find out how much life insurance you need, by using our online needs calculator.

Then quickly find out the cost of life insurance by getting an online quote.