Insuring your life may seem a waste of money, especially since it actually doesn’t lend financial assistance to the one who pays for it. The main purpose served by a life insurance policy is that it helps an easy fund transfer to the beneficiaries. Besides, it also helps to avoid taxation on the funds.
Read along to when a life insurance policy actually comes to be of use and how.
For married individuals – Married couples usually share financial obligations. Death benefits received from a life insurance can help the surviving spouse to pay for the final expenses, and also to meet other financial obligations.
For those who have dependents – If you’re the major or the only earning member of your family and have dependents, you’ll need life insurance coverage. The death benefits will act as an income replacement option for the survivors who are financially dependent on you.
For those who have kids – Proceeds from a parent’s life insurance policy is often arranged to provide for the children and their education.
For the single parents – Single parents need life insurance protection all the more since the future of their children are completely dependent on them. In case the parent passes away, the children should be left without anyone to take care of them. They would need financial assistance for their education and for other living expenses.
For those who have their house on mortgage – Life insurance proceeds can be used to pay off home mortgage loans. Thereby, your spouse or family wouldn’t need to continue the mortgage payments for your house.
For those who have ongoing debt payments – The proceeds from a life insurance policy can be used to pay off the outstanding debts of the insured person, if he dies a premature death. If a person is involved in forex trading or has similar other investment portfolios, he or she will particularly need life insurance protection to cover against the risks.
For those who are going to retire – Those who are approaching retirement may need to save for their future. Life insurance policy may act like a safe investment option, so that they can leave behind a legacy for their heirs.
For the small business owners – Small businesses are often dependent on the owners for income generation. If the owner or a partner who owns the business dies a premature death, the death benefits received from his life insurance policy will provide for the financial deficits.
Apart from that, permanent life insurance policies also allow the policyholders to loan against the cash value accrued on the existing policy. Thus, a policyholder can also borrow from his own policy to meet his immediate financial obligations. He can repay it back within time along with interests or the outstanding amount would be deducted from the death benefits that the beneficiary will receive. Even the unmarried individuals can buy life insurance policy to cover funeral expenses or credit bills.
The face value of your policy would however depend on your financial requirements. And it’s a misconception to think that you can’t get life insurance coverage at affordable rates. There’s the option of term life insurance, which may not be accompanied with the cash value advantage, yet offers coverage at cheaper rates than the permanent life insurance policies
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