Life insurance is a kind of investment many people are not ready to make if they have policies sponsored by their employers and may think they are young and buzzing with life, why do they need life insurance.
But the truth is that almost everyone should keep some money aside for their loved ones. The shock of the death of a person, who is the breadwinner of the family, gets even more disturbing and life changing for the other family members if they do not see a secured financial future.
There are many reasons why you should get life insurance:
• The non-working spouse would get some time to decide what should be the done with the household and children and their expenses. Obviously, the death benefit amount from the policy will not last a life time. But for the years, the money will compensate for the earnings that you gave to your family, your spouse can decide whether to do some work or start a business.
• Your retirement can be funded by a life insurance policy, whose benefits you can reap after a few pre-decided numbers of years. The amount can give money for further investment at a later stage.
• The business of the deceased can be kept running with the amount from the life insurance policy.
• The loans and mortgages of the deceased can be paid off with the amount.
• Medical and funeral expenses can be covered in the policy.
• Young children or ageing parents may be able have a soft landing in the event of the death of the sole earning member of the family.
There are basically two types of life insurance policies you can take up. They are:
• Whole-life policy- It is a permanent type of a policy and combines life coverage with an investment fund. Here you will be buying s kind of policy which will pay a fixed amount at the time of your death, and some portion of the premiums paid by help build up cash value from the investments made by the insurance company.
• Term insurance- Here, you have pay monthly premiums and from that you will get a life coverage that will last for a set amount of years. This type has no investment angle to it. The premiums to be paid by a young and healthy adult are way too less than an aging person with some heath issue. If you want to tale up this policy, do it early in life so that you will have to pay less annually and will have a sufficient amount collected after say, 20, 30 or 40 years.
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