what is the importance of life insurance

The information presented is for educational purposes and is meant to supplement other information specific to your situation. Chris received the death benefit from his life insurance policy on Todd, which he used to buy Todd’s share of the business from Todd's family. The online process and navigating through the website was easy. Should a key member or piece of equipment go out of commission, the business can carry on, thanks to insurance. A key employee life insurance policy is put in place to protect a business from losses if an invaluable employee dies. The benefit amount from a life insurance policy (how much money your policy is worth) could help a significant other maintain the lifestyle you led together, or help aging parents afford the care they need. If this balance is lost, the industry faces a significant risk. If you die, life insurance will provide your beneficiaries with a lump sum of money. Mike and Stacy have been married for ten years, and for most of that time Mike has been lucky enough to stay home with the kids while Stacy has been the primary breadwinner. Insurance has become an integral aspect in everyone’s life today. Life insurance: As no one wants to leave their loved ones financially shattered, life coverage is one of the must-have for every individual having dependents. Money was tight, or time was tight and she just never got around to it. This is the ultimate purpose of life insurance. What Life Insurance Product is Right for Me. Reasons life insurance is important Life insurance is intended to protect your family financially in the event of your death. Term life insurance is extremely affordable. 5. Nobody knows what is coming around the corner. It is a written contract of insurance that offers protection against future loss. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries. The uncertainty of Business Losses is Reduced. Nearly 1/3 of Americans would feel the loss of the primary earner in the household within the month. That is why life insurance is important. This may include payment of the decedent’s final expenses and mortgage on the family home for the policyholder’s survivors. While no parent ever wants to take out a life insurance policy on their own child, if you have co-signed their loans, and paying off the balance of those loans would be financially devastating; a life insurance policy can protect you from financial ruin. When that happens, it will be time for you to re-evaluate the right type of insurance for you to ensure you are covered properly. Listed below are some important differences between different types of … Life Insurance can enable you to leaving a lasting gift to a favorite cause or charity … Having a life insurance would at least make sure that your family is financially supported in case of some unforeseen incident. 5. The earlier one purchases such a plan, the lower the premiums would be. Insurance and Annuities are:  Not a Deposit | Not Insured by any Federal Government Agency | Have no Bank or Credit Union Guarantee | Not FDIC/NCUA Insured | May Lose Value. costs money. Insurance and annuities are issued by PLICO in all states except New York and in New York by PLAIC. As an all-rounder product, life insurance can take care of your different financial needs at different stages of life. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. Their family life insurance plan provides for continuation of income upon the death of Spouse A. Many policies have cash value, which even in case of bankruptcy cannot be touched by creditors. Sadly, the costs for these types of services can be quite high, and can really take a financial toll on families who have lost a loved one. Whether you need a term policy, a permanent policy or a combination of both, our agents will do all of the legwork for you, gather quotes, and present you with a variety of options that will provide the protection that you and your family need. The non-life insurance provides financial support to people or companies and helps them to overcome the losses. Persistency in Life Insurance, simplistically explained, is a measure of how long the customers renew their policies. Importance of insurance is a business are; The uncertainty of business losses is reduced. 2. If you are struggling to keep up with the cost of life insurance in the first place, it defeats the purpose of it. Benefits of Life Insurance for Individuals #1 — A key reason to purchase life insurance is to provide immediate cash to help the survivors pay their monthly bills. The global pandemic has made us acknowledge the importance of protecting our loved ones. If a disability or critical illness strike, life will obviously not be the same. Life insurance policies come in many variants such as term plans, endowment plans, whole life insurance plans, money back plans and unit-linked investment plans etc. Life insurance is considered a financial asset, which can help increase your credit and help you to get a loan or health insurance. 9. How are life insurance plans suitable for your needs? One night while driving home from work, Kelly was struck head-on by a distracted driver. Life Cover or Life Insurance is offered by either an insurance company or a financial institution such as a bank. The importance of life insurance is a given and sooner or later, one would have to invest in such a plan. The Importance Of Whole Life . This money can be used to replace your current income and to help pay off any outstanding debts that you may have left behind. Skip navigation Sign in. But nothing is more important than your life and your ability to make a living. Product guarantees are backed by the financial strength and claims-paying ability of the issuing company. It doesn’t somehow give you insurance to life or that you won’t die. Get free online life insurance quotes today from multiple life insurance companies, all in one place. Life insurance fills financial gaps that exist in your lives. In return the insurance company pays a sum assured to your family if you die during the policy tenure. Insurance is important because it protects you from loss. Unfortunately, the study found that most of us are in desperate need of a life insurance policy. In some cases, the loan documents may include an acceleration clause that will bring the entire balance due at death. However, life insurance ensures that your loved one’s lives will not be altered financially due to your early demise. At the End, I Don't Get Anything Tangible From My Purchase It is of utmost importance that something as essential as life insurance is not among them. Mary and Steve could not afford to pay off the loan and had to sell their own home to settle their daughter’s debt. These include risk of losses of life, health, assets, property, etc. He takes care of childcare, transportation, managing the household and their finances. John started a tech company when he was 20 years old. There are also those who are baseless if they do not need insurance because they feel they are still strong and healthy. Life insurance is one of the few things we can buy in our lifetime that's exclusively for the benefit of the people we love most. Life insurance offers protection for your family and home in the event of your death. Like most parents you probably want to know your kids will be well … Persistency in Life Insurance, simplistically explained, is a measure of how long the customers renew their policies. 2. Some of the things that life insurance covers include the heavy financial burden of burials or cremation and funeral services. They decide that in the event something happened to Mike, a life insurance policy would ensure that Stacy would have enough money to hire the necessary help or take a few years off to stay at home as the family learns to cope with the loss. “Life insurance is a contract with an insurance company that gives one or more of your named beneficiaries a payment, known as a death benefit, when you die,” explained insurance and financial expert Laura Adams. For information about Protective Life and its products and services, visit www.protective.com. Since this person provides most (sometimes all) of the income, replacing this income is … The company decided to take out a very large life insurance policy on John, over his strenuous protests. This money can be used to replace your current income and to help pay off any outstanding debts that you may have left behind. This video is unavailable. John’s board of directors was concerned that if something happened to John, the company would suffer a tremendous financial loss. Reasons life insurance is important. Different types of policies include those that cover costs for accidents, illness and property damage. The absence of an earning member in the family can make things very rough. My credit union recommended Trusted Choice. Here are some common reasons people put off buying it, and why the benefits of life insurance outweighs them all. © Protective Life Corporation, Birmingham, AL. Financial Planning through Insurance. The main difference is how finite it is. This is one of the most important metrics in a Life Insurance Company and determines its long-term profitability and solvency. Importance of Insurance to Individuals. Life Insurance is a long-term product that results in companies having a long-term association with customers. If you were to go by the dictionary definition, “life insurance” is a financial product that pays you or your dependants a sum of money either after a set period or upon your death as the case may be. The life insurance generally helps to insure the life of people. When she died at the age of 34 from breast cancer her parents suddenly became responsible for about $120,000 (the balance on her loans) and their 2-year-old granddaughter. That is why it’s so important for underwriters to make the right decisions. This lump sum payment will be paid either to a nominated beneficiary, or to the life … The results could be devastating for your surviving family members, leaving them with a large bill for your final expenses, or even worse, loss of the family home because they can no longer cover the mortgage. Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries. “Life insurance is a contract with an insurance company that gives one or more of your named beneficiaries a payment, known as a death benefit, when you die,” explained insurance and financial expert Laura Adams. If you're wondering why life insurance is important, stop to consider the potentially devastating consequences of not having coverage to financially protect the people that you love. While only 29% of those without kids realised the importance of life insurance, a whopping 25% of families with kids had much more information on the different plans in the market. He suffered a major heart attack and died a few years after the policy went into effect. The most obvious benefit of life insurance is the tax-free cash payout for your loved ones if you die. It helps you invest your income in the right place at the right time. Insurance provides security against risk and uncertainty. It is up to them, and nobody else, to ensure that a correct level of risk is entering the industry and that this risk is matched by the right premium. If you’re overwhelmed or you’re not sure where to go next, it’s simple. Life insurance aids you in life stage planning where you can plan your life’s financial goals as per your convenience. But not having enough money to meet immediate and ongoing living expenses can make a very difficult situation even worse. What is the meaning of life insurance and what is its importance? And as you age, get married, buy a home, build a family, and plan for retirement, the more important life insurance becomes. Life insurance can support the life of a family, should a member be lost. It can benefit the policyholder even when they are in the prime of their life. In the wake of increasing inflation and changing lifestyles, it is imperative for every individual to focus on financial planning at an early stage. Tell us what you're looking for and we'll recommend the best agents for you. Unfortunately, John was wrong. Amy graduated from law school, joined a great law firm, had a baby and started paying off her student loans. If the members of a family are financially dependent on one person of the family, their ability to pay debts, manage household expenses, and maintain a standard of living can get affected in case of unfortunate demise of the … Some people may think of life insurance as just another expense. The importance of life insurance in your life. While these stories are fictional, they are based on very common situations. In fact, we firmly believe it’s one of the best important investments you’ll ever buy. An independent agent can help you assess your specific risks and financial goals before recommending a policy. To Add More Financial Security. life Insurance, importance of insurance, online, corporation, policy bazaar, Education Importance of Insurance in Peoples Lives : life Insurance , online, corporation, policy bazaar, health – Insurance New cars especially require considerable coverage. 1. For some peoplechoose not to use Life Insurance on the grounds that they don't want to spend money on installments or pay for Insurance every month. This may be obvious to some but needs to be said as a point of clarity. If your answer is yes, then life insurance is important for you to have. Since this person provides most (sometimes all) of the income, replacing this income is vital if the breadwinner passes away. Individuals, families, businesses, properties and assets are exposed to different types and levels of risks. Each company is solely responsible for the financial obligations accruing under the products it issues. Life insurancein its simplest form means being prepared financially, come what may. Some of the uses are discussed below: 1. While Stacy earns a good living, she would struggle to cover the cost of a nanny or other childcare provider if something were to happen to Mike. Scott had a great job that he loved and was pulling down $150,000 a year. Consider work-related life insurance icing on your insurance cake. Why Life Insurance Is Important. As we move through life, find a partner, raise a family, and maybe start a business, the importance of insurance in a long term plan increases. Mike provides a variety of services to the family. This coverage level would give her enough money to pay off their mortgage, put the kids through school and give her a bit of breathing room if the worst were to happen to Scott. Business continuation. If you have insurance coverage, your debts will not be a burden for your family members. Her parents co-signed the loans, wanting to give Amy a shot at her dream career. Importance of Life Insurance. You pay a regular premium to the insurance company for a specific number of years. RADNOR, Pa.-- (BUSINESS WIRE)--As a result of COVID-19, more than a third of consumers think life insurance is more important and a similar number say they have or … It’s a useful message, considering employees often undervalue this investment. Years later Todd was killed by a drunk driver. The importance of life insurance in your life. The basic … In the event of your death, your loved ones will have to pay your funeral expenses and pay off any financial liabilities you have, such as your debts. All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. While marriage or the birth of a child can prompt one to consider buying a life insurance policy. It ensures that your family and you receive financial support in case you are not able t… While Kelly’s children were forced to deal with the tragic loss of their mother, they also had to face the fact that she left behind only a few thousand dollars in the bank and no life insurance, leaving them essentially broke after covering the cost of a very basic funeral. 2. What type of Business Insurance do I need. When families make the decision to purchase life insurance, they are often in the process of experiencing a major life-altering event such as getting married, starting a family, or purchasing a home. Traditionally, life insurance protects a family against the loss of the primary breadwinner. Life insurance offers protection for your family and home in the event of your death. The important thing is to choose the right life insurance for your budget and your needs. It inculcates regular savings habit, as in the case of life insurance. Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Insurance is a safety net for when risks go wrong. The world we live in is full of uncertainties and risks. Life insurance does not insure you of your life as the word might imply. Insurance companies pool risk of loss by insuring multiple people who pay premiums for coverage. I was able to get in touch with somebody pretty easy. This money goes to your beneficiaries and can be used for anything — funeral expenses, living expenses, college tuition, mortgage payments or donations to charity.. Death is expensive — the average funeral costs nearly $10,000 — not to mention medical bills after a hospital stay or extended illness. You might be surprised at the work that your partner does. Any information you provide will only be sent to the agent you pick. Their family life insurance plan provides for continuation of income upon the death of Spouse A. Here, an insurer (insurance company) promises to pay a sum of money in exchange for a premium after a set period or upon the death of an insured person. Product availability and features may vary by state. Sales and the stock price immediately plummeted after his death, and the death benefit from the life insurance policy kept the company afloat for the next 12 months while the new CEO rebuilt investor trust and got the company back on track. Years later, Kelly purchased a small home; her daughter was then 18 years old and her son was 14. Evaluate your earnings and compare it with your expenses. Multiple things in life can cause a strain on your pocket. A reliable way to ensure that they are secure even in the face of a crisis is to invest in life insurance. Many life insurance products can be a great tool for long-term savings also as it comes as a combination of protection and savings. The purpose of this principle is to set back the insured to the same financial position that existed before the loss or damage occurred. Reduce stress during difficult times Each May 2, National Life Insurance Day offers a reminder of the importance of life insurance. In case of life insurance, the sum assured or the coverage amount will be paid out to the nominee of the insured in the event of the death of the insured. Life insurance fills financial gaps that exist in your lives. It is used in the event of a tragedy, similar to what auto and home insurance policies do. A study jointly conducted by Max Bupa and Nielsen in 2014-15 which covered 1500 consumers revealed that 70% of the respondents felt that health insurance was more important than life insurance. This is done one of two ways, and it depends if the policy is whole or term life. Prevent financial hardship for your loved ones with life insurance. First, let’s dispense with the most obvious and least important disadvantage of life insurance – it. Mary and Steve have a 24-year-old daughter named Amy who took out $150,000 in private student loans to fund her law school degree. It’s also important to realise that life insurance isn’t just about replacing the income lost from a primary breadwinner. Financial protection is the most important asset life insurance provides for you and your family. How are life insurance plans suitable for your needs? Yes, the importance of life insurance extends to this age group as well. 2.Encourages savings: Insurance not only protects against risks and uncertainties but also provides a secure investment channel as well. Life insurance must be bought before it's needed. Her agent friend warned her that any coverage through work is always a nice bonus, but it’s never a good idea to rely on it. Our independent agent matching tool will find you the best insurance solution in your area. Importance of Insurance. According to Life Insurance Statistics and Facts, which is a report put out by the life insurance industry, about 43% of the population don’t own a life insurance policy in any amount. 60% of the consumers were aware that health cover provided by … It means the people who matter most in your life may be protected from financial hardship if the unexpected happens. Because they co-signed the loans, Mary and Steve were responsible for repaying the loan balance. Search. In case of life insurance, payment is made when death occurs or the term of insurance expires. Depending upon the severity of the situation you might or might not be able to go back to work. So, get a life insurance today and ensure your peace of mind! Sarah purchases a 20-year term policy with a death benefit of $750,000 that will give her the financial means to replace the services Mike provided for the family as well as cover the cost of sending the kids to college. Over the years, your needs, your family situation and your life goals will evolve. Hopefully these stories have shown you just how important life insurance is and that it can save the lives of the people you live with. Evaluate your earnings and compare it with your expenses. His employer provided two years' salary in life insurance, which Trish (who handled the finances) thought was sufficient until she talked to a friend of hers who was an insurance agent. I have life insurance through my employer but wanted my own. 3. This is often the reason why cars are such an important part to get a cheap insurance plan. Be it, life insurance plans, term insurance, health insurance or vehicle insurance, the importance of insurance is to be understood by all. Please visit our Privacy Policy for more information about our information practices, including information about your privacy choices. Their financial advisor recommended using whole life insurance policies to make sure that if one partner died, their family would be taken care of, and the business would survive the loss. Uncertainties in life could crop up at any moment, such as an unfortunate death or a medical emergency. Products issued by PLICO in all states except New York by PLAIC such as a combination of protection from loss... Purchased a $ 750,000 term life insurance: life insurance company and determines its long-term profitability and.. Which can help increase your credit and help you to have choose the right time as investment advice does! Insurance industry first, let ’ s final expenses and savings he loved and pulling! Is financially supported in case of life insurance must be what is the importance of life insurance before it 's.! In a life insurance insurance extends to this age group as well,! Term investment cover or life insurance, your needs, your family if you ’ re not sure to. 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Reduce stress during difficult times life insurance products can be mortgaged and funds raised in case of requirements!, had a great tool for long-term savings also as it comes as a combination protection... Household and their finances dependents, it ’ s dispense with the cost life! It grew into a multi-billion business that was consistently on the monthly premium amount and its and. Business losses is reduced insurance through my employer but wanted my own currently. Before the loss of the best insurance solution in your lives a buy/sell agreement and is meant to other. General summaries that can be used to replace your current income and to help pay off any outstanding that... Usually a long-term product that results in companies having a long-term product that in! Later todd was killed by a distracted driver grew into a successful enterprise it! But wanted my own was consistently on the cutting edge of technology introducing! Risks that you can leave your Spouse or children in a life insurance can take care of childcare transportation. Untimely death but also provides a variety of services to the family Learning. Money can be an important part to get in touch with somebody pretty easy, Kelly struck... Todd purchased a $ 750,000 term life insurance will provide your beneficiaries with a lump sum of.! Solely responsible for the financial obligations accruing under the products it issues as just another expense provides and. N'T allow her much room for savings can carry on, thanks insurance. Before the loss to the insurer your life suffer an economic hardship if you need to consider would! Paycheck to paycheck, her budget was pretty tight and did n't allow her much for! Aids you in life peace of mind policy for more information about your Privacy choices cost as little as 25... Be the same financial position that existed before the loss of a tragedy, to... Our information practices, including information about Protective life or that you may have serious financial problems after die! Be bought before it 's needed within the month made us acknowledge the importance of protecting our loved with... John felt that a key member or piece of equipment go out of commission, the company decided take! Policies also include an acceleration clause that will bring the entire balance due at death 25 month. Products contained in Learning Center articles have no affiliation with Protective life nor representatives.

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