Wednesday, May 05

6 Reasons You Should Consider Life Insurance

You’ve probably heard about life insurance at some point but you’re not sure of what exactly it is and why you should arm yourself with one. Life insurance is a policy that promises to provide a monetary settlement for your loved ones in the event of the holder’s death.

A good personal financial plan should include life insurance, savings, and investments. It can be confusing to distinguish between the three because certain types of life insurance include saving and investing components.

Savings is the money that you set aside for emergencies or for big ticket items, and it is usually kept in a readily accessible account such as bank savings or money market account. Investments, on the other hand, produce a higher rate of returns than savings, and may not be readily accessible.

Life insurance, as mentioned earlier helps the policy holder’s family to settle its financial obligations, depending on the type of policy. For example, an education plan enables the parent to save towards the financing of their children’s education, while life savings plan gives you the opportunity to earn better interest on your savings and also get a free life insurance cover of up to ?1million.

Here are 6 reasons why you consider a life insurance policy:

  1. Living Benefits: Yes, you can benefit from life insurance while alive! Many life insurance policies have tremendous covers that can be enjoyed while a person is alive. These include critical illness and permanent disability covers, interest on savings, cash back etc
  2. To Pay Final Expenses - The cost of a funeral and burial can easily run into hundreds of thousands of Naira, and nobody wants their spouse, parents, or children to suffer financially after death. A way to prevent relatives from suffering after the death of the breadwinner is to buy a life insurance policy like a life savings plan.
  3. To Cover Children’s Expenses – Parents want to be sure that their kids are well taken care of and can afford quality education. For this reason, life insurance policy like education plan enables parents to save towards financing their children’s education. It is essential that parents plan for the future of their children and supporting their education even in death is a good reason to buy a life insurance policy.
  4. To Replace the Spouse’s Income - If the husband or wife dies while the kids are young, the surviving partner will need to replace the lost income, which was essential to their lifestyle. A life insurance policy can help actualise this. For instance, life savings plan generally offers a free life insurance cover worth millions of naira.
  5. To Pay off Debts - In addition to providing income to cover everyday living expenses, the family would need insurance to cover debts like the mortgage so they wouldn’t have to sell the house to stay solvent.
  6. To Buy a Business Partner’s Shares – The death of a business partner may ruin a business. A life insurance on all business partners can prevent this, as the insurance policy will come in handy, and possibly prevent the destruction of the business.

Life insurance is an important part of financial planning. Getting a life insurance policy isn’t also necessarily about you, and so a life insurance policy shows that either in death or life, you’re with your family, ready to support them.