5 benefits of having a life insurance policy in place
You may constantly hear how important it is to have a life insurance policy in place, but do you understand why?
Understanding how your life insurance policy can be used can help you to plan for the long term needs of your family.
Life Insurance is there to protect your family
The main reason that you’ll want to consider taking out a life insurance policy is to create a safety net for your family’s future. If something were to happen to you unexpectedly, your family may struggle financially, so having cover in place could help to ease these at what is already a very difficult time.
Life insurance can help to replace a lost income
Whether you’re the main breadwinner or not, a sudden loss of income could have a huge impact on your family.
Your family will still need to pay for housing costs, food, utilities, childcare etc, and without your income this could prove difficult. The benefit of having a life insurance policy in place means that your family would have help to cover these expenses.
Knowing what your monthly/annual expenditure is can help you to determine how much cover you need.
It can help cover debts
Wouldn’t life be simple if debts simply disappeared when you die, but unfortunately this isn’t the case. After you’ve gone, your family must pay these debts. This could include credit card debt, personal or business loans and mortgage debt. Having to deal with unpaid debts, on top of grieving the loss of a loved one can seem especially cruel. Having something in place to ease some of the financial burden can really help to take the pressure off.
It can help to cover funeral expenses
Funerals can be expensive and happening so soon after a loved one’s death, this can bring added stress. Life insurance can cover funeral costs. If you don’t have any beneficiaries, you may still consider taking out a small policy, which would solely cover these expenses.
Life insurance could offer your children an inheritance
A life insurance policy can help to pay off the mortgage or cover other living expenses. However it doesn’t have to be used this way. You are eligible to apply for life insurance even if you are mortgage and debt free.
A lump sum payment after your death could help to provide for your children’s future. It may help them to pay for educational expenses or may even provide a deposit for their first home.
How your beneficiaries use your life insurance payout will depend on individual circumstances, but it’s certainly an essential part of future financial planning.