What Life Insurance Can Do For You
In Credit Score of CreditGuru (May 21, 2024 8:23 am)
Life insurance is a required investment since it provides financial security to your loved ones in case of your untimely demise. Since it offers a guarantee of the beneficiaries receiving the entire coverage amount, every family member can buy a policy of their own.
Besides providing replacement income in the event of the policy holder’s death, a life insurance policy can also act as an investment option which can serve as a person’s pension plan in the future. A person who has a life term insurance policy will be able to do the following:
1. A policy holder can provide financial security for his/her family in the event of his/her untimely or unexpected death. When a policy holder dies, death benefits in the form of cash will be given to his/her designated beneficiaries. This cash will serve as the income that will be lost with the death of the policy holder. Depending on the amount purchased by the policy holder, the coverage may be enough to shoulder the needs of the surviving family for a number of years.
2. A house provides shelter and hence must be protected for the family. If your home is under a mortgage then an insurance policy can be used to pay off this mortgage. If money is not left behind, then the property can be foreclosed and your family will be left without a shelter.
3. Estate planning can be costly. Everyone needs an estate lawyer who will take care of the distribution of their assets to beneficiaries and execution of the will when they are gone. An insurance policy, even if it is cheap life insurance, can take care of paying the fees of this estate lawyer.
4. Term life insurance quotes are the cheapest insurance plans since they do not include a savings component like a permanent plan. If you take a permanent plan, then you can benefit from the cash that is accrued in the savings component even when you are alive. Since a permanent plan is taken for the life of the individual, the cash value can be withdrawn after retirement and act as a pension amount.
What is the primary role of an insurance policy? It is that it takes care of the financial needs of your dependents when you die. So, you must decide about the right coverage amount – large or small that will take care of their needs. For this, you must identify their needs, which can be divided into three. The first is the immediate need of the family when the insured dies. This could be taking care of outstanding medical bills, funeral expenses, building a memorial and taking care of outstanding bills that have fallen due.
Recurring needs is the second basic need and this refers to the daily expenses on food, clothing, house repairs etc. Future needs of the family constitute the last and final basic need. This could be the cost of providing a pension for your spouse on retirement, sending kids to school / college or even helping children start a business on their own. Most insurance experts suggest that people multiply their current salary by 10-15 times to arrive at an adequate coverage amount.
With the many insurance policies and companies doing business, it is easy for a novice to get cheated by being sold the wrong policy by a fraudulent company. So, how can you avoid this and buy insurance only from a reliable firm with a sold reputation and a good credit rating? You can ask the opinion of those you know who have already bought insurance. You can request life insurance online quotes and then check the company’s rating from raters like ‘A. M. Best’. You can visit insurance forums, chat rooms and read insurance blogs that will discuss different policies, the problems people experienced etc. In this way, you can get a good policy.
Life insurance offers many benefits – chief among them being the ability to protect your family if you die suddenly. It is important to choose a reliable insurance company with a good rating. Always read the clauses very carefully before signing on.
Article by David Livingston of EQuote, who is a specialist in everything life insurance. For more information on insurance life term and instant life insurance“, visit his site today.
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