Do you have a life insurance? Why did you buy it? Was it to save tax or just because you should have one? Unfortunately, this is the sad state of life insurance sector in our country. People do not understand the real value of life insurance. It helps secure your family’s finances after you. Here is how life insurance protects your family’s financial future:
If you are the sole breadwinner of the family, the unfortunate event of your death will destabilise the family’s finances. Your family could take a while to grow strong again. If your kids are young, there might not be enough income till they graduate. Insurance acts as a replacement for your income in this period. It will take care of their daily expenses and emergencies.
Provide for Children’s Future
The cost of education is rising. If you want your children to receive quality education, plan for the future. A life insurance policy protects and nurtures your child’s interests. In your absence, the insurance amount will provide for their education and other expenses.
You must also think about your debts and who will repay them. It is possible that lenders will bother your family to recover the amount loaned to you. The insurance amount can fund your home loan, car loan, credit card bill or any other debt. The insurance ensures your family’s financial security without the tension of debt repayment.
Build a Safety Net
If you have many earning members in your family, the daily expenses can be taken care of. That means the insurance amount can be saved for a rainy day. The insurance amount must be transferred to a bank account or invested. This will help your family in times of need. During the 2008 financial crisis, people understood the importance of an emergency fund. If there are other sources of income, the insurance amount can add to the family’s emergency fund.
Life insurance is a necessity. It should form an integral part of your financial planning. Your family can never replace you. Yet you will fulfil your responsibility by protecting your family’s finances.
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