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The Benefits And Importance Of Life Insurance

The Benefits And Importance Of Life Insurance

Insurance is a protection against the unfortunate and unexpected when life throws curve balls at well-crafted plans. Many families and individuals are often caught saying I never thought would happen to me. Auto insurance protects against accidents, homeowners insurance protects against fire and theft, health insurance will hopefully save your life without putting you hundreds of thousands of dollars in debt and life insurance makes it possible for your family to keep going on without you. It's not a pleasant thought but insurance is one of the single most important products which can be purchased by an individual. If you have the foresight to plan for it in the financial means to pay for it then it is only common sense for people to purchase various types of insurance including life insurance.

While auto insurance is purchased by individuals who own or drive vehicles and homeowners insurance is purchased by property owners, life insurance is actually meant for a specific group of people; those who have or are starting families. When getting started in life many individuals will get an education and start their career but have little to no assets to their name. They may have a vehicle and an apartment but are living paycheck to paycheck and trying to make ends meet. It is often said that the single most expensive purchase a person can make is their home but in reality it is themselves. Education, experience, promotions and earning potential are all time-consuming and expensive to both develop and benefit from over decades of work. When starting a family, other individuals, namely a spouse and children, directly rely on you for their well-being.

You may often see commercials advertising the benefits of a cut rate life insurance policy able to pay for funeral expenses. In reality, funeral expense costs will be the least of your families financial struggles. What about paying for the mortgage? Who is going to pay for day-to-day expenses such as food and utilities for a year or more? Life often gets in the way and years roll by with little concern about money coming in or going out. The primary earner of any family has a fundamental responsibility to make sure their loved ones are properly supported in the event of their untimely death. Plans for the future such as sending the kids to college or paying off the mortgage or planning for retirement hinge on decades of savings and investing. Life insurance helps fulfill these goals and is one of the primary benefits when purchasing a policy.

It goes without saying that anyone with a family needs to purchase life insurance but the question is how much. A common guideline is to purchase at least 10 times the annual salary of the primary income earners in the family. This is because most families live up to their expenses and budget accordingly. If a breadwinner should pass then the proceeds from a life insurance policy, in an ideal situation, will be able to pay off a home mortgage, provide a year or more of living expenses and fund college education accounts. Life insurance proceeds should also be able to eliminate all existing debt and provide a financial clean slate so your loved ones don't have to stress over food and other expenses. The emotional turmoil of losing a loved one can often be overwhelming. Eliminating the additional stress of financial obligations allows them to focus on picking up the pieces and begin moving forward.

Image by: Jeheme