Is Life Insurance Beneficial?
Life insurance offers two important benefits. The first benefit is that it protects your loved ones against the financial consequences of an unexpected death. The second advantage is that it provides living benefits.
Everyone knows that the financial consequences of death can be overwhelming. When a spouse, parent, child, sibling or grandparent dies, there is a great deal of emotional trauma to deal with by the surviving family members. However, the financial consequences can be even more destructive. If there is no life insurance in place, surviving family members are thrust into a position of extreme financial difficulty. Not only do they have to contend with the loss of future income, but there's also the death and burial itself. They generate sudden and unexpected expenses.
Looking at mortality statistics will show you that a large number of people die every year, before reaching a normal life expectancy. What if the deceased is a breadwinner and they die prematurely? The consequences are tragic in so many ways. Survivors are not only forced to deal with intense heartache, but they must also face some significant financial consequences, as well. They must figure out how to meet daily living expenses, minus one household income.
Funeral costs are not the only immediate expenses that crop up. Other expenses could include such things as executor's fees and estate administration. Outstanding debts like promissory notes, car loans, mortgages, the balance on credit cards and medical expenses must be paid. Not to mention there are death taxes, and state and federal taxes.
Also, consider the future security of loved ones. Living expenses, mortgage payments, and children to raise and educate, are only a few of the concerns, but in the end, it doesn't matter what financial obligations are left behind. The bottom line is bills must be paid, and that takes money. If you want to guarantee your family does not suffer through the financial devastation a premature death can generate, then you must make plans now, and ensure they have adequate funds available.
There may well be a time during which the surviving spouse cannot work, and for some, there is the survivor's blackout period to be concerned with, as it is during this time social security stops paying the surviving spouse, because there are no longer dependent children. You may also want to ensure there are retirement funds available for a surviving spouse. Really, life insurance is a type of estate building, and it can create an immediate estate, at a time when it is needed most.
An added advantage of life insurance is its living benefits. Some permanent policies provide policyholders with a cash benefit, in addition to the death settlement. This cash value belongs to the policyholder. Insurance companies allow the policyholder to make withdrawals from the cash benefit, which can then be used by the policyholder for any reason. The policyholder can also take out loans from their insurance company, and they use the policy's cash value as their collateral.
Everyone knows that the financial consequences of death can be overwhelming. When a spouse, parent, child, sibling or grandparent dies, there is a great deal of emotional trauma to deal with by the surviving family members. However, the financial consequences can be even more destructive. If there is no life insurance in place, surviving family members are thrust into a position of extreme financial difficulty. Not only do they have to contend with the loss of future income, but there's also the death and burial itself. They generate sudden and unexpected expenses.
Looking at mortality statistics will show you that a large number of people die every year, before reaching a normal life expectancy. What if the deceased is a breadwinner and they die prematurely? The consequences are tragic in so many ways. Survivors are not only forced to deal with intense heartache, but they must also face some significant financial consequences, as well. They must figure out how to meet daily living expenses, minus one household income.
Funeral costs are not the only immediate expenses that crop up. Other expenses could include such things as executor's fees and estate administration. Outstanding debts like promissory notes, car loans, mortgages, the balance on credit cards and medical expenses must be paid. Not to mention there are death taxes, and state and federal taxes.
Also, consider the future security of loved ones. Living expenses, mortgage payments, and children to raise and educate, are only a few of the concerns, but in the end, it doesn't matter what financial obligations are left behind. The bottom line is bills must be paid, and that takes money. If you want to guarantee your family does not suffer through the financial devastation a premature death can generate, then you must make plans now, and ensure they have adequate funds available.
There may well be a time during which the surviving spouse cannot work, and for some, there is the survivor's blackout period to be concerned with, as it is during this time social security stops paying the surviving spouse, because there are no longer dependent children. You may also want to ensure there are retirement funds available for a surviving spouse. Really, life insurance is a type of estate building, and it can create an immediate estate, at a time when it is needed most.
An added advantage of life insurance is its living benefits. Some permanent policies provide policyholders with a cash benefit, in addition to the death settlement. This cash value belongs to the policyholder. Insurance companies allow the policyholder to make withdrawals from the cash benefit, which can then be used by the policyholder for any reason. The policyholder can also take out loans from their insurance company, and they use the policy's cash value as their collateral.
About the Author:
Susan Reynolds is the webmaster for a leading South African Insurance Provider who specialises in Life Insurance.