What Is Life Insurance?
Life insurance refers to a policy that people buy from a life insurance company as a form of protection and financial stability after one’s death. Its main function is to help beneficiaries financially after the owner of the policy dies or develops a terminal or critical illness.
A life insurance policy represents a contract between the named insured and the insurance company wherein the insurance company agrees to pay an agreed upon sum of money to the insured’s beneficiaries as long as the insured’s premiums are current.
Why should you purchase Life Insurance?
People take out a life insurance policy for a variety of different reasons but one of the main reasons is to ensure that funds are available in the event of the death of someone who has a financial responsibility to someone else. Life insurance aids in ensuring that a family is financially secure and can continue to maintain their standard of living after the death of a breadwinner in the family.
Life insurance is all about ‘peace of mind’ knowing that your beneficiaries will be financially taken care of in your absence. With a life insurance policy in place, your family will be able to:
- Continue to pay the home mortgage
- Maintain their current standard of living
- Pay off debts, taxes and other expenses
- Create a fund for college education if required
- Create a fund for a family member with special needs
- And take care of any financial needs
Life insurance will protect your family’s dreams for the future and will ensure that your beneficiaries have access to all the opportunities that they deserve when you are no longer able to care for them.
Do you really need Life Insurance?
If there is someone who would suffer economic hardship if you died, then the answer is yes… you need life insurance. A family with young children has a clear need for life insurance and if both spouses work in order to cover living expenses, the loss of one income will cause the family immediate economic hardship. If one spouse works ‘inside the home’ and does not bring in a formal income, his or her death will require the surviving spouse to maybe hire child care, housekeepers and other professionals to help run the household and that can be a significant new expense.
If you are married without children or you are single, then you may need life insurance to protect your partner or surviving family members against the costs associated with your death such as funeral expenses and outstanding debts. Unless you already have an abundance of wealth and financial resources, your survivors will probably need life insurance to cover their living expenses.The lack of sufficient life insurance coverage when a loved one dies can have devastating consequences for a family which can last for years so whatever your budget and your needs, a life insurance policy can help protect those who matter most to you.
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