Life Insurance is crucial in financial planning, serving multiple roles beyond just offering a death benefit. Read on for the key functions and benefits of Term Life Insurance.
Term Life Insurance is coverage that is in place for an agreed-upon period, in other words, a ‘term.’ The insured (you) will pay an annual premium during the term. When you make payments for Term Life Insurance, you secure a benefit payout to the people you select as your beneficiary/beneficiaries if you pass during the term of coverage.
How Can Life Insurance Help Me?
Life Insurance is crucial in financial planning, serving multiple roles beyond just offering a death benefit. Here are some key functions and benefits of life insurance:
Income Replacement
If your family depends on your income, Life Insurance can offer essential financial support to uphold their current standard of living. In the event of your death, the insurance payout ensures that your loved ones can cover daily expenses and other financial obligations without facing immediate hardship. This security allows your family the ability to maintain stability and continue pursuing their goals and aspirations during a challenging time of transition.
Flexible Use of Funds
With a Term Life Insurance policy, beneficiaries have the freedom to utilize the death benefit in a number of ways. Your beneficiaries can decide if they wish to make mortgage payments, settle outstanding debts, or manage day-to-day living expenses.
Inheritance Creation
Life Insurance can provide peace of mind by ensuring that your heirs will benefit in the future without the need for substantial assets simply by naming them as beneficiaries.
Policy Flexibility
Term Life Insurance offers significant flexibility, allowing policyholders to adjust coverage amounts based on changing life circumstances, such as the birth of a child or a change in financial status. In contrast, mortgage life insurance offers no such flexibility; it is tied strictly to the mortgage balance and terms set at the policy’s initiation, with no opportunity for adjustment, regardless of how a policyholder’s personal circumstances may evolve.
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Who Should Have Life Insurance?
If you have people who depend on you, financially or otherwise, it’s recommended that you have Life Insurance. Life Insurance can provide your loved ones with security, knowing that in the event of loss, your family’s lifestyle won’t need to change.
What Does Life Insurance Cover?
Life Insurance can cover many types of expenses your beneficiaries may have. It will provide them with a lump sum payment, which can be directed to pay off immediate debts, ongoing payments like a mortgage, final expenses such as funeral costs, or future expenses such as post-secondary education or a wedding.
If you contribute more to running your household, your life insurance benefit can be used to outsource those requirements in the event of your death.
What is a Beneficiary?
A Beneficiary is the person or entity that you designate to receive the payout of your Life Insurance policy. This could be a spouse, parent, child, or anyone of your choosing. You can also name a business, organization, or charity of your choosing as your beneficiary.
Check out our blog on Beneficiaries for more detail.
In conclusion, Life Insurance is a fundamental component of financial planning that offers numerous benefits. Term Life Insurance provides a straightforward, cost-effective solution for ensuring financial security for your loved ones. It can replace lost income, cover final expenses, create an inheritance, and offer flexibility to adapt to your evolving needs. For those with dependents, Life Insurance is essential for maintaining your family’s lifestyle and financial stability in the event of an unexpected loss.
By securing a Life Insurance policy, you are taking a proactive step towards safeguarding your family’s future, allowing them to continue their lives with peace of mind and financial support.
Take our Needs Assessment today to determine the best Life Insurance options for you and your loved ones.