The death of a family member is traumatic, especially if he or she was the breadwinner of the family. At such times, the bereaved family members have to cope with not only a personal loss, but a financial crisis as well. This is where life insurance comes into picture. It guarantees that in your absence, your loved ones are taken care of, and are financially secure.
What is Life Insurance?
Life insurance is a legal contract between two parties, namely the insurance company, and the policyholder. It ensures that the beneficiary receives financial support in the event of the insured’s death or accident. The terms of the insurance policy state that the policyholder agrees to pay the specified premium at regular intervals. Life insurance depends on a host of factors, including the age, income, expenses, outstanding loans, number of dependents, health, etc. It is mainly of four different types, universal life insurance, term life insurance, whole life insurance, and endowment life insurance. Described in detail below are the advantages life insurance offers.
Benefits of Life Insurance
- Life insurance provides monetary coverage to the family members in the event of the policyholder’s demise.
- It acts as an excellent investment, protecting your assets. Life insurance provides custom-made investment options that are suited to one’s changing financial needs at different ages. Planning for your children’s higher education, marriage, a home, and even retirement options can all be taken care of by investing in life insurance. For a young couple with kids, life insurance can provide education as well as wealth insurance. Whereas for an elderly couple, the same can offer retirement and mortgage plans. Whatever money you saved when you earned, now serves as a source of income when you retire.
- After the demise of the insured, life insurance can be a constant source of income for the bereaved family members, making it easier to fund children’s education and pay bills on time. If the policyholder has incurred any debt during his lifetime, a policy cover will help his spouse/family to repay the debt.
- Funeral expenditure nowadays is costly. Paying for the services, at a time when you are still numb and reeling from the sudden loss of a loved one can be hard, to say the least. In such cases, a life insurance policy can come to your aid, by taking care of the funeral expenses.
- You can add riders or health insurance plan to your life insurance policy, and have guaranteed protection against the increasing hospitalization costs and critical ailments.
- When you apply for a policy, you need to pay the stipulated premium at regular intervals. This practice gets you into the habit of saving a certain amount of money for long-term use, which is essential to satisfy your financial needs.
- Life insurance is non-taxable, and hence makes for a great source of savings.
- In case of a cash crunch, when the policyholder needs a loan, he can avail of one through the insurance policy, without having to worry about the hassles of repayment. The insurance carrier deducts the loan amount from the life insurance policy upon maturity.
- If the policyholder owns a piece of land, he has to pay estate taxes. If he intends to transfer the possession to his heir, a life insurance policy can help by offering the required funds.
Thus, you have seen how essential it is nowadays to opt for a life insurance policy. If you haven’t yet applied for one, do it without delay. Do it at a time when you are young and healthy, with no major ailments. The sooner you apply, the lesser the premium amount you have to shell out. Compare insurance quotes from several companies. This way you can make a wise and informed decision based on what’s best for you and your family’s requirements. In case anything happens to the breadwinner of the family, life insurance can come instantly to rescue. It can be your ally in the worst of times, working like a protective blanket, offering monetary assistance and peace of mind.