Is Life Insurance Right for You?
OK, it’s clear that we can’t call life insurance as our investment or saving, however it is also clear that we can’t deny the fact that this insurance plan can bring many benefits to our financial plan. The main idea behind life insurance is to give a kind of protection to the insured people and their family so the family will not suffer any financial trouble when the insured people death.
There are many moments in our life that will affect our financial condition and obligation. Getting married has a new baby, house and property purchase, kids education, just to name a few. With that many factors that depend in our income, it will be a wise decision to make sure that the family will be insured and financially protected when we die.
If he has a family who depends upon his earning capacity, he is a perfect candidate for life insurance. A person should consider the long term as well as the short-term financial obligations to decide whether he needs life insurance. The questions to ask are:
1. Do you have people including family and business partners who are financially dependent upon you over a long period of time?
2. In the event of your death, do your dependents have enough assets and resources including liquid cash to take care of all their needs and to pay off your financial debts?
The second question requires a further assessment of the short-term financial needs of the family of the deceased. These include working out the following factors:
Inheritance procedures can be time consuming and the family will need funds till they get access to the property of the deceased.
The availability of other liquid assets like bank accounts or stocks can reduce dependency on life insurance.
The existence of a large amount of non-liquid assets as against liquid assets makes it necessary to have insurance.
The amount of debts and taxes the person stands to owe after his death.
Businessmen must ensure there is enough cash flow in the business for his inheritors to maintain his business.
Considering the above questions, one would find most people do need life insurance, though one can do without it if one has no dependents or young kids to support. Still, other obligations like a home mortgage or a sole proprietary business or planning for a comfortable retirement for yourself or your spouse are some of the reasons why a life insurance is still a good financial program to pick up.
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