When times are good, a family will have an income coming in that pays the bills and keeps everyone comfortable, educated, and entertained. However, sometimes things happen that mean life cannot continue to be rosy.
There could have been an unexpected accident or someone ends up with a health condition that will shorten their life. These are two circumstances where a life insurance policy will provide the lost income to the affected family.
To think more about life insurance, take a look at the Ethos Life Insurance Guide and also read on further.
Financial Security
There are two approaches to obtaining financial security. One, to save money; and two, to take out a life insurance policy.
The first one will take some time, until we can build up enough savings to declare ourselves financially secure.
We would need to have saved the equivalent of 6 months worth of income, should circumstances suddenly change and there is the death of a loved one. This is to keep up with household bills for a while.
Also, there will be funeral expenses to settle. Changing circumstances to adapt to the loss of income would take time for those left behind.
This is where life insurance can give us extra breathing space, especially in situations where people can only afford small insurance premiums, as opposed to saving significant sums of money.
We never know when that unfortunate event might happen, and we hope it never does.
Peace of Mind
Mentally, we can relax more when we know our finances and financial risk are taken care of. Life insurance policies can provide us with that peace of mind.
As we talked about above, financial security needs to go beyond savings that may not be sufficient, and be extended into us having a life insurance policy that will offer the ultimate protection.
Life is certain in some ways but unpredictable in others. We just do not know when something might happen that will change our life emotionally, and financially.
Under-Insured
Many people will be under-insured. It can be because they cannot afford to be the opposite, or because they have not allowed for enough factors. This is typical with life insurance, when we do not always think about how risky our job is.
To us, it just seems that what we do is “all in a day’s work”, but to others who may send us back down to Earth and reality, it risks our family’s financial position every day a partner steps out of the house and goes to work.
Nobody wants to think that a family member may not return home one day because of the job that they do, but it is the reality for many families. Some will be adequately insured for the scenario, but others not, and then end up struggling financially thereafter without life insurance.
The best way to make sure that we are fully insured with life insurance is to carry out a risk assessment of our situation. We weigh up the risks of our job and the crime rates of the area we live in, against how much income our family would lose when the main wage earner is missing.
We value insurance advisers that can help us to decide on what life insurance policy will suit our needs and those of our family.
If what we have now is inadequate, we should look to do something about it, so that fuller protection for all eventualities is provided.
It is important to consider the level of cover in terms of the amount and how long cover is provided for.
Monthly premiums need to be affordable, but also adequate to provide the lump sum our family would need in the event of the death of the head of the family.
We should bear in mind that other factors affect our premium, other than the amount of cover we get, but they also relate to our age, health, habits, and our occupation because they determine what make us more or less at risk to our insurer.
Shift Frequency © 2021 – The Importance of a Life Insurance Review