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Life insurance offers two important benefits. The first benefit is that it protects your loved ones against the financial consequences of an unexpected death. The second advantage is that it provides living benefits.
The financial consequences of death can be extremely crushing. When you lose a spouse, parent, child, sibling or grandparent, the emotional trauma itself is overwhelming. Yet, the financial consequences can be even more destructive for survivors. If there is no life insurance, the surviving family members can find themselves facing extreme financial adversity. Not only do they have to deal with a possible the loss of an income, but also the death and burial generate unanticipated expense.
If you look at the mortality statistics, you will see that a significant number of people die each year, long before they achieve their normal life expectancy. If the deceased is a breadwinner in a family, that premature death can have tragic consequences, on many levels. Not only are survivors trying to deal with deep personal grief and loss, but they are also facing grave financial concerns. They can no longer rely on that breadwinner’s salary to meet the daily living expenses.
Aside from the cost of the funeral, other expenses survivors must contend with include executor’s fees and estate administration costs. Outstanding debts, like car loans, mortgages, credit cards, medical expenses, promissory notes and death taxes, will fall on the shoulders of the survivors, and must be paid. There are state and federal taxes to consider, as well.
The future security of loved ones is something else to consider. Living expenses, mortgage payments, and children to raise and educate are important considerations. It can be an overwhelming burden, and it really does not matter what financial obligations are left behind. There is only one thing that can resolve them, and that is money. If you want to ensure your family does not deal with the financial devastation a premature death can produce, you need to arrange to provide sufficient monies to cover their needs.
There may well be a time during which the surviving spouse cannot work, and for some, there is the survivor’s blackout period to be concerned with, as it is during this time social security stops paying the surviving spouse, because there are no longer dependent children. You may also want to ensure there are retirement funds available for a surviving spouse. Really, life insurance is a type of estate building, and it can create an immediate estate, at a time when it is needed most.
An added advantage of life insurance is its living benefits. Some permanent policies provide policyholders with a cash benefit, in addition to the death settlement. This cash value belongs to the policyholder. Insurance companies allow the policyholder to make withdrawals from the cash benefit, which can then be used by the policyholder for any reason. The policyholder can also take out loans from their insurance company, and they use the policy’s cash value as their collateral.
Susan Reynolds is the webmaster for a leading South African Insurance Provider who specialises in Life Insurance Policies.
Tags: Death, Disability, Finance, health, health insurance, insurance, Life Cover, Life Insurance, People