Insurance is designed to protect a person and their family from disasters and financial burdens. There are various types of insurance, the most basic and important of which is life insurance.It takes care of your dependents after your death.
Since there are certain financial commitments you need to meet throughout life and do contribute in some way to the family income, you need to provide something even in death—to secure the home, help the family meet expenses for a while, protect dependent parents, or secure the children or spouse.
How much insurance a person needs would vary depending on their lifestyle, financial needs, sources of income, debts, and number of dependents. An insurance adviser or agent would recommend that you take out insurance that amounts to five to ten times your annual income. It is best to sit down with an expert and go through the reasons why you should consider insurance and what kind of insurance planning would benefit you.
As an important part of your financial plan, insurance provides peace of mind for any uncertainties in life.
1. Life insurance If correctly planned, a premature death will provide funds to deal with monies due, mortgages, and living expenses. It offers protection to the family you leave behind and serves as a cash resource.
2. It secures your hard-earned estate on death by providing tax-free cash, which can be utilized to pay estate and death duties and to tide over business and personal expenses.
3. Life insurance can have a savings or pension component that provides for you during retirement.
4. Some policies have riders like coverage for critical illness or term insurance for the children or spouse. There are certain rules regarding eligibility for riders that you will need to determine clearly.
6. In bankruptcy, the cash value as well as death benefits of an insurance policy are exempt from creditors.
7. Life insurance can be planned so that it will cover even your funeral expenses.
9. Insurance protects your business from financial loss or any liabilities in the event that a business partner dies.
10. It can contribute towards maintaining a family’s lifestyle when one contributing partner suddenly dies.
Insurance is vital to good financial planning and security, but you would need to assess your personal risk and long-term commitments. Insurance stands a person in good stead throughout life and can be used in case of emergencies during a person’s lifetime by requesting a withdrawal or loan.
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