Life insurance – the basics
Long-term insurance, also called life insurance, covers a person’s life or health. It will pay out an agreed amount of money to the person whose life is insured, or their beneficiary, after a particular event has taken place, such as an accident resulting in disability, unemployment or death. Funeral policies fall into this category.
If your family depends on you for financial support, consider life insurance as part of your financial plan for life, which includes planning for retirement. Ideally, life insurance should be taken out as soon as it becomes necessary, e.g., as soon as you get credit or have dependents. The cost of life insurance is linked to your age, meaning that the younger you are, the less it will cost you.
Here are 3 reasons you need life insurance:
Providing for your family
It may seem a waste of money to pay a monthly premium for an insurance payout that will not benefit you while you are alive. However, in the event of your death, a life insurance policy will pay out money to a beneficiary (usually a family member) of your choice, so that your family will continue to be financially supported. It can also help cover final costs such as those of your funeral.
Owning a business
There are certain risks to owning a business in the event of your death. Will your business have enough money to keep on running? Have you signed surety on behalf of the business for business loans that will need to be repaid on your death? Having a life insurance policy will help take care of these issues.