Most people aware of life insurance acknowledge its importance but then underestimate the impact that their passing away can have on surviving members. This sees many delay or ignore getting the right cover which can have devastating effects when death occurs suddenly.
If this sounds like you, chances are you’ve been thinking about purchasing a cover but you’re not yet convinced whether or not it’s a good idea.
In this article, we discuss life insurance and all that it entails. Our goal is to help you form a solid decision around insurance especially if you are the family’s breadwinner.
Before that though, what is life insurance?
Life insurance is a contractual agreement where an insurance provider agrees to make a lump sum payment to your estate when you pass away. Depending on the terms of engagement, the death benefits can be paid in a lump sum or as regular installments. Getting life insurance protects your beloveds’ welfare by ensuring less financial burdens and more peace of mind.
There are several variations of life insurance but the two main ones are whole of life and term life insurance policies. When it comes to pricing, whole of life insurance policies tend to be costlier than term assurance.
The key to nailing it on life insurance is understanding how the policies work so that you can pick a suitable cover for your situation.
How life insurance works
Most providers have quite straightforward procedures to apply and acquire life insurance cover. But generally, it involves making monthly payments known as premiums to the insurance provider.
The amount you’re required to pay depends on several factors including the length of the contract, your age, current health status, and the amount insured. Should you pass away during the covered period, a lump sum payout is given to your loved ones.
Is life insurance a good idea?
There’s no quick answer to that. Usually, getting life insurance is dependent on your situation, intention, or circumstance, and this can vary from one person to the other. Even so, below are a few reasons you might want to take out this cover:
Guarantees your family will be provided for
Providing for a family is never a small task especially when you are the breadwinner. Now, imagine what would happen if you were to suddenly pass away or no longer in a position to provide. If that gives you chills, you can still do something about it.
By taking out a life cover, you guarantee that your family will be well taken care of should you pass away. Those in school can continue getting quality education until they’re able to provide for themselves. On the other hand, your spouse could use the death benefits to pay daily bills or other recurrent expenses.
Helps clear outstanding debts
Life insurance policies such as mortgage protection can help guarantee a roof over your family’s heads in the event you depart. Also, your beneficiaries can use your death benefits to clear expenses that potentially turn into debts, including car loans, balances on credit cards, and funeral costs.
The financial security over debts protects your family from shame, evictions, and other consequences that come due to unpaid obligations.
Protection of assets
Some life policies guarantee the protection of your valuable assets that generate income. For example, corporations take out insurance cover to protect their key employees or partners. This covers them (companies) against loss while giving them funds to replace those departed.
Other types of business life insurance policies that you can get are shareholder protection, key person insurance cover, and business loan protection policies.
Peace of mind
Essentially, life insurance is meant to soften the blow of losing a loved one. It does this by helping to protect the financial future of those who you left behind. As such, getting the right cover lessens your worry over the distress your death may potentially bring to them.
To this end, we hope you now understand the importance of purchasing a life insurance policy. It’s not only a good idea but a must-have if you’d like to secure the future of your family and sleep better at night.
If you have any thoughts or questions on this cover, please share them with us in the comments below.