Life insurance and financial planning are two aspects that many of us don’t have, don’t know about and we haven’t spent enough time analyzing our situations to find out how we could benefit from them. A vast percentage of people throughout the nation are living their lives paycheck to paycheck without thinking about what the future may hold.
Many people don’t realize that they need to act and plan to ensure that their hard earned cash will last them through retirement or in fact if illness were to set in and the worst were to happen. This reflects the well know saying; ‘It’s easy to forget about tomorrow when you’re busy thinking about today.’ Now however is the time to start thinking about tomorrow; it’s time to start financially planning with the help of a life insurance policy.
A lot of people hold the misconception that term life insurance is just something that is taken out by people in the age range of 40+. The reality of the situation is the younger you are, for example your 20’s or 30’s, when you take out your life insurance policy, the better off you will be in the long run. It shouldn’t be looked at as an extra cost but as an advantage for the fact that the younger you are when you take the policy out, the cheaper it will be.
Taking out a life insurance policy is an essential part of your financial planning. A lot of the time financial planning is limited to being associated to setting financial goals and ensuring that you have enough money to pursue dreams. It is not something that you merely write up one day and forget about; it is something that should be followed up on and it should be a continuing process. One other thing that your financial plan should be used for is to incorporate your life insurance so you can set out how much money you have for your dependents (loves ones) once the worst has happened and you are no longer around.
There are a number of life insurance policies on the market to ensure that a range of situations and needs are catered for. The type of policy you take out is up to you but the basic principle of life insurance applies to all these policies. This principle is making sure that you leave enough money to the ones closest to you so they don’t have to worry about the following:
* Funeral expenses
* Mortgage or rent repayments
* Education fees
* Medical expenses
* Household bills
* General expenses
One important factor when you are taking out your life insurance policy for the above reasons is how many people are relying on you financially. This is a prime example of why insurance is such an important part of your financial planning. By looking closely at who depends on you financially you will be able to work out how much of your current income goes to your depends and what the money is used for. When you have done this you will be able to calculate an estimated payout from the life insurance company and then split this amount up to cover all of the money that you pay to your dependents. This is an excellent use of financial planning as you will be able to set goals financially to ensure that all expenses are covered even when you’re no longer around.
Financial planning demonstrates just how important life insurance is to not only your future but to the future of the people who are closest to you. Remember dealing with the loss of a loved one is hard enough to come to terms with, so ease the burden of having to deal with expenses as well by providing your family with cover.