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Why Life Insurance Is A Must In Financial Planning

Personal_Finance / Insurance Jul 09, 2018 - 05:28 PM GMT

By: Anwar_Hossain

Personal_Finance While considering financial planning, life insurance plays a vital role. The basic feature of insurance is to secure an individual and his/her family in varied ways. It helps a person and his family against the cost of illness, accidents, death, and disability.  The price rise increases day-by-day and because of this, it is important for a person to lay emphasis on planning financially right from the beginning. It is known that a financial plan of a person must be tailored to satisfy the requirements at various phases of life. Moreover, it is vital to maintain a well-balanced combination of instruments to resolve different requirements of safety, earning and saving. While earning and saving, people often ignore the important aspect i.e., the protection. Getting Life Insurance from a reputed company helps to accomplish the financial goals as per the planning.


Reasons to go for Life Insurance:

Majority of people ignore opting for a Life Insurance until they face a major setback in life due to some unfortunate situations and incidences. They may not know in advance what would be the effects of not protecting themselves and their loved ones through insurance. The major goal of purchasing an appropriate life insurance policy is the protection from unpredicted circumstances. Moreover, it can also assist in terms of wealth build-up, protection, and availing the benefits of liquid money during the time of crisis.

It is common that people normally get perplexed on what amount to invest as well as where to deposit because there are many options available like bonds, stocks, real estate and several others. Out of many recommended investment tools, Life insurance is one among them because it is basically a simple and reasonable approach. Most significantly, it serves the needs at various phases of a person’s life.

If you wish to earn high returns, you can purchase a protection plan (also known as a term plan) during the initial phase. The plan is reasonable and during the later phase, it provides the prospect of obtaining high returns. However, it must be remembered that it comes with a certain level of market risk. With the help of this investment tool, you can plan your child’s education in a proper way because you can use its education plans. Furthermore, you can also plan the retirement in a proper way through its pension plans.

What are the benefits of Life Insurance in Financial Planning?

It facilitates efficient saving-

Life insurance not only proves to be a good life cover, it also assists the customers to save in a well-organized manner. With the help of this benefit, it leads to the formation of a decent corpus. It is possible that some other financial tools might provide you wonderful returns; however, this instrument accomplishes it with negligible involvement, investment or skills of the consumer.

It caters to various needs effectively-

The prime motive of insurance is to protect the financial needs of your family while you are not present. Such kinds of needs must be properly analyzed based on the life phase at which the person is. Whether the person has prevailing liabilities, the prospect of liabilities, the number of dependents, type of lifestyle, financial goals, etc. Life insurance can cater to the financial need during the child’s marriage, child’s education, retirement planning or for loan repayment.

The significance of life insurance in terms of a long-term security and savings tool originates from its key aspect of serving as a financial instrument during the need. As every need is met when they arise, Life insurance from Life Insurance Corporation offers great peace of mind as well as it boosts the risk-taking capacity of a person.

It is flexible-

The insurance tool provides the flexibility for users to invest in long-term. The corresponding long-term investment would reap high returns. The different products offered by Life Insurance covered in this permit the person to methodologically save for attaining long-term results. The pertinent return makes up an amount which could be utilized to fund various milestones of life. It is common that most people outsight is they benchmark the returns from this tool along with several other kinds of investment options. While doing that, these people usually fail to understand that the basic aim of any kind of insurance is to provide protection and the same is later trailed by returns.

How it plays an important role to accomplish your financial plan?

Functions as a lump sum of cash for expenses-

Many people have not decided how to help his/her family financially after his/her death. Would you not try to cover all your family’s expenses if you know you are going to die tomorrow? The answer is yes but no one knows when the death is so it is best to plan for Life insurance in order to provide financial security to the family members. Availing enough of it within your financial plan could appropriately cover such costs, protecting the family during cases of emergency savings. This is because the family members can use the amount insured and need not go for taking a financial loan.

Allows payment of a mortgage-

The insurance instrument covers taxes, payments, insurance as well as interest. For the majority of people, it is found that a mortgage is typically one among their biggest expenses. Due to this reason, the majority of married couples share this long-term based financial goal together. However, it is uncertain that after our demise your family could afford this kind of huge expenditure in absence of your income.  Under such cases, the corresponding life insurance policy can assist your dear ones to make payment of mortgage debt, removing the huge monetary burden along with the wide prospect of eventual foreclosure or a loan default.

Provides care for some special needs-

This insurance instrument plays a vital role in financial planning in case you might have some special needs. This includes the need of the child or old-aged parents who rely upon you, in terms of financial support. Life insurance could offer special financial support required for such persons in your life.

Financial planning is not complete in absence of life insurance. If you are looking to protect and plan for your finances and for your future, you must look at the variety of life insurance plans present in the market and make a choice soon.

By Anwar Hossain

© 2018 Anwar Hossain - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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