Life Insurance Is A Necessity, Not A Luxury

Life insurance is an easy answer to the very difficult question: How are my loved ones going to manage financially when I die? A lot of people overlook making plans for when they pass away as no one likes to think about death. Who can blame them…

Death is inevitable, and there are tons of reasons why people must plan for the loved ones they will leave behind after their demise. One of the best ways to do so is to take out a life insurance policy.

Life insurance pays a lump sum at the death of the policyholder or a regular income. For a person who is the sole breadwinner in the family, it is an essential investment that will cater for spouses and children who rely on their earnings.

For instance, if an individual is a sole provider in the family, without a life insurance policy, members of the family may not be able to continue payments on the mortgage and other day-to-day expenses which were previously undertaken by the provider of the home.

Perhaps there are two sources of income in the family. If one person passes away, it may be harder to continue caring for the home as the responsibilities may be too much for one person to handle.

There are two types of life insurance to consider:

 

Term life insurance

This policy covers you in case of death and only for a specific term.

Term life insurance as the name implies is purchased for a specific term or period of time. Usually, the insurance term is for 1 year, 5 years, 10 years, 20 years or 30 years. At the end of the term, the policyholder will have the option to renew the policy for another term.

 

Permanent life insurance

This policy not only covers you in case of your demise but also has a fixed premium for the entire time you have the insurance policy, i.e. for as long as you live. It also may build in value over time. Permanent insurance is also known as whole life or universal life.

You can also build up cash value in your permanent insurance plan. This means that you can borrow against the cash value and your beneficiary can still collect the death benefit at the appropriate time.

However, remember that any loan taken from the death benefit is subtracted from the value of the policy that will be paid out at the time of death.

Which Life Insurance Policy Should You Get?

 

Many financial experts recommend taking a term insurance for the period of time when you need the most protection. For example, a young father with two young children would want to protect his family until his children were grown and finished with college.

After that time, however, his family would have less need for life insurance. Generally, the cost of term life insurance will be lower when you are young.

If you want life insurance for your entire life, then permanent insurance is the best choice. Both term and permanent life insurance offer the security that comes with knowing your family’s future is protected.

In the unfortunate event of the death of a family breadwinner, on top of the grief that the family members will be suffering at that time, if the deceased person isn’t insured, then the family will face a huge financial burden as well.

In order to live life without constantly worrying about something untoward happening or your family suffering after you’re gone, choose a life insurance policy that will provide for your family when you pass.

Nothing is as unpredictable as life and for each of us to live comfortably in the world, we each have to be prepared.