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3 Oct, 2017

Why Life Assurance is such an Important part of Family Financial Planning

As individuals get older, get married, start families or start businesses family financial planning is important. The need for life assurance becomes more prevalent and it becomes a fundamental and very important part of an individual or family’s financial planning strategy.

Importance of Family Financial Planning

Family protection

Life assurance is so important to protect your family in the event of a premature death of a parent. When both parents are working, life insurance is needed to cover the loss of income if one dies. In the event a parent stays home, life assurance is needed to pay for services looking after the children. This is so the remaining parent can work.

Unfortunately, many of us are familiar with families who have lost one of the parents. We know a family can also be left financially struggling after a death. Depending on your age, the term of the cover and the sum insured, life assurance can be relatively cheap. There should be no excuse for leaving a family exposed to such a financial burden.

Whilst most realise the importance of life assurance, it is regularly left forgotten. It is so important to insure that your family will be financially secure in the event of your death. Life assurance should be implemented as quickly as possible if no life cover is in place.

To clear any mortgages, loans or additional debts

In addition to providing life assurance to protect income, it is also important to make sure any outstanding debt. For example car loans, credit card debt or mortgages will be cleared in the event of your debt. Many people view a mortgage protection policy as adequate life assurance. This in the event of the death pays out under these policies. It is normally paid directly to the bank or mortgage lender with no cash payment to the remaining family.

There should be a separate life assurance policy for family protection on top of your existing mortgage protection policy and this should include provision to clear any additional outstanding loans as well as funeral expenses.

Additional financial security or leave an inheritance

Most parents want the best for their children and in addition to income replacement on death, it is of great peace of mind to know that if you die prematurely that your children will still be able to afford college education, maybe start a business, help with marriage costs and many other areas where a parent can be helpful while alive. To be able to leave more financial security for your family for future expensive events in their lives can be a great legacy for a parent to leave.

Life assurance plans can be set up in many ways including trusts where some of the proceeds are not released to the beneficiary until a child reaches a specified age.

Peace of mind

Unfortunately, none of us know when we are going to die. We all hope we will live a long and fruitful life but this is not always the case. In reality it could be next week, next month or 60 years from now. The internal knowledge that you have made provision for your loved ones in the event of a premature death can be very satisfying. You will know that regardless of what happens, your family and loved ones will have the financial security you would want for them to have a best as future as possible with maximum opportunity in their future.

Contact oomph today to learn more about your life assurance policy options.