Insurance in general is designed to protect you and your family from disasters and the financial burden which so often follows. There are many different types of insurance of which the basic and most important is considered to be life insurance which provides for your family after your own death.
Since there are certain financial commitments you have to meet throughout life you need also to provide something even in death to secure the family home, to assist the family to meet expenses for a while, to provide for dependent parents or to provide security for your spouse and possibly children.
These financial obligations might include things like your funeral expenses, unsettled hospital and other medical bills, mortgages, business commitments and providing for the education expenses of your children.
Just how much insurance you need will vary depending on your lifestyle, income and financial needs, debts, and how many dependents you are supporting. As a general rule you should have insurance coverage that is five to ten times your present annual income.
An important part of your financial planning, whole life insurance provides peace of mind for any uncertainties in life.
1. Life insurance correctly planned will provide funds in the event of premature death to deal with monies due, mortgages and day-to-day living expenses. It provides protection for the family you leave behind and acts as a cash resource.
2. It gives security for your hard earned estate on death by providing a tax free cash sum that can be utilized to pay estate and other death duties.
3. Life insurance plans can also have a savings or pension provision that can help to fund you in retirement.
4. In some cases policies have riders such as restricted coverage of term insurance or critical illness for a child or spouse. There are particular rules considering eligibility for riders that you will need to determine clearly.
5. In case of bankruptcy the cash value, as well as death benefits, of any insurance policy is exempt from creditors.
6. Holding a valid insurance plan is considered as having a financial asset and this improves your credit rating when you arrange health insurance or a home loan or business loan.
7. Term life insurance has double benefits as it protects and you can get your money back at important points in your life.
8. Life insurance can be arranged in such a manner that it will cover even the expenses of your funeral.
9. Insurance protects your business from financial loss or any liabilities in case a business partner dies.
10. It can go a long way towards keeping a family’s standard of living if one partner dies unexpectedly.
Insurance forms a vital part of good financial planning but you do have to evaluate your personal risk and your longer term commitments.