Why is it Important to have a Life Insurance?
What life insurance can do for you
Life insurance is no one’s favourite purchase. You may question the importance of purchasing life insurance – is it totally necessary? Why would you pay for something you, personally, will never even use?
While you may initially think your hard-earned cash would be better spent elsewhere, this may not always be the case.
While no one expects anything to happen to them, having peace of mind, just in case, is a real relief. Those you leave behind will receive benefits in the form of a lump sum payment.
You may also want to consider the following costly scenarios your family may face should anything happen to you (touch wood):
- Your family is forced to sell their home as they are not in a position to pay off the mortgage.
- Ongoing debts or expenses are left to your spouse and/or family to pay off in your absence
- There is not enough money to spare for a quality education (or the education you would have liked for your children).
What life insurance covers, and what it can be used for
Life insurance covers a range of things from funeral expenses to ongoing debts. You can select the amount of coverage that makes sense to you, which will become a lump sum payout should anything happen.
Life insurance policies cover all causes of death, except for:
- Suicide in the first 13 months of cover.
- Death due to intentional self-harm in the first 13 months of cover.
Different policies will provide different types of coverage – so it’s best to shop around for a policy that suits your needs and preferences.
For those left behind: What can the funds be used for?
- Pay off outstanding debt
- Cover school fees
- Make up for lost income
- Medical expenses
- Required assistance
- Even a recuperative getaway…
- Whatever is needed to assist in what can be, an extremely difficult time in one’s life
Who will be covered?
As part of your policy paperwork, you will select a beneficiary/beneficiaries. In the event of something happening to you, the person, or people, you select as beneficiaries will receive the payout.
If you decide to choose more than one beneficiary, it’s a good idea to allocate a percentage of the whole payout to each person.
You may also want to consider having a secondary beneficiary who will receive the payout should a primary beneficiary pass away before you, or around the same time (in an accident, for instance).
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