Some reasons why life assurance is such an important part of a family’s financial planning
As individuals get older, get married, start families or start businesses 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.
Life assurance is so important to protect your family in the event of a premature death of a parent. If both parents are working life assurance is needed on both to replace future income on death and in the event of a parent at home looking after children, life assurance is needed to pay someone to look after the children while the remaining parent continues to work.
Unfortunately, many of us are familiar with families who have lost one of the parents and have been left financially struggling as a result. Depending on your age, the term of the cover and the sum insured, life assurance can be relatively cheap and there should be no excuse for leaving a family exposed to such a financial burden on top of dealing with the loss of a loved one.
Whilst most realise the importance of life assurance it is regularly left on the long finger as something we intend to take out. It is so important to insure that your family will be financially secure in the event of your death and 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 against the loss of future income, it is also important to make sure any outstanding 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 but in the event of the death the pay out under these policies 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.