What is Life Insurance?
Life insurance is a contract between insurance policy holder and an insurer, where the insurer promises to pay a designated amount of money in exchange for a premium, upon the death of the insured person.
Why do I need Life Insurance?
Why we work day in and day out? Where do we expense our salary? The answer is simple; we need money for foods, for accommodation, and fulfill our daily activities. Money is needed to sustain our daily life. Who will financially protect our family, our loved one if something happen to us? Tomorrow and unexpected fatal, who know which one will come first?
Life insurance is the only solution for uncertainty we are facing by providing peace of mind in term of financial protection to our family and our loved one. Here are few reasons why life insurance is important to us, why we should have life insurance in our financial planning.
1. Financial protect your family and loved one
If your family and loved one depend on you to support their livelihood, then life insurance is a must. Your wife is not working, don’t generate any income and your children is still studying, so whenever any fatal happen to you, they will lose all the financial support.
Life insurance is the only source to replace your income to sustain their daily life and standard of living.
2. Mortgage protection
Think about it – do you want your family and loved one to be homeless if you die unexpected? Where your families have money to pay monthly mortgage if you as the only source of income left?
Life insurance can be used to pay off the outstanding mortgage balance.
3. Education protection
Does education important to our children especially in current society which emphasis on certificate, skill and knowledge? Certificate is the only way as a stepping stone for you access to corporate door in the job market.
What will happen to your children if something happen to you and you don’t have any money left for them for their education? Should we have backup plan to protect our children for their future, invest in their education protection?
4. Final expenses
Funeral expenses and medical bills is a hefty burden. At the junction of difficult and emotional time, your life insurance can cover these expenses without financial hardship.
5. Leave An Inheritance
If you don’t have any assets to pass to your children, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries. This provides your children a good financial future and provide for any monetary needs that will arise. Just take a example: You buy an insured value of 100k life insurance with monthly premiums of 100 dollar. 20 years of total premiums is 24k. Let say accidentally something happen within 10 years, try to imagine the amount of 100k you get from it. How much and how long period you need to save for 100k? How much you have paid for the exchange of this 100k? Yet the best part is that you get back all the 24k premium you have paid for with interest if nothing happen to you.
6. Supplement for your retirement
Life insurance contains cash value that will be return to policy holder once its term is ended. You not just take back the cash value of total premiums you have paid for the 20 years term life insurance, yet you earn the interest for the premiums that you have paid for. Ultimately, it let you save your money at the same time you earn the free benefit of financial protection.
Life insurance is the best way to save money while getting financial protection for your family and loved one. Having life insurance is first priority in financial planning for anyone who wishes to have peace of mind at the same time saving money and obtain financial protection.
Just see people around us, who doesn’t need life insurance? If they already have bought it, are them get the right coverage based on their current needs? 10 years ago you bought the life insurance when you are single and without property is not suitable again to the current needs after you have married, have children and have property. The life insurance policy needs to be review and upgrade to the latest financial needs.
Eventually, having a life insurance is equal to you take your money out from left pocket and put into your right pocket. The best part is you get free financial protection that is most needed in your financial planning to protect your family and loved one. Do you agree?
Here is an example of life insurance:
Alan has a family of 5 persons, himself, his mother, his wife and 2 children. Alan work for a company with salary 6000 per month. He needs to pay car loan and mortgage. He is the only person to financially support his family. What will happen if he doesn’t buy life insurance and fatal happen to him?
Scenario 1 without Life Insurance:
His family lost the only source of income. Tough burden is awaiting them; funeral expense, medical bills, car loan, mortgage, medical need for his mother, schooling fees and tuition fees for his children.
–>His family may loss of house resulting from unable to pay the mortgage. They will loss the only shelter.
–>They may need to borrow money from relatives or get help from social welfare organization through fundraising for immediate expense like costs of funeral expense and medical bills.
–>His wife will need to seek for job to financial support his mother and their children, end up that nobody to take care of his mother and children.
–>His children may force to enter job market earlier as unable to pay college fees.
–>Any emergency need arising in the future will creates another big impact and burden to them.
Scenario 2 with life insurance:
A big amount of insured money will be given to beneficiary. With the right coverage life insurance Allan purchase, the amount will able to pay off the mortgage in one go, an amount of money to support his two children college life until they are graduate, and daily expenses needed in future including immediate expenses.
–>His housing loan mortgage balance is fully paid off. They can continue stay there and own the house.
–>His wife can continue to stay at the house, take care of his mother and their two children.
–>His mother medical bills that may arise in future are taken care of.
–>His children can concentrate on their study, complete their college.
All the financial expenses are taken care of by life insurance that Alan has bought, thanks to his sound financial planning and mindset of protection for any unexpected.
Right life insurance coverage tailored to individual need play s the most important part for the success of life insurance role in financial planning and protection. Tomorrow and unexpected, which one will come first? Who know?
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