Life Insurance: Planning for the Future

Who needs life insurance? Are you the bread earner of your family? So, are you 100% sure that your family will be financially strong even in the unfortunate event of your death? Definitely no one is quite comfortable thinking about his own death, but the truth is it is inevitable. The best we can do is securing the lives of those whom we love. Life insurance gives you one such opportunity. Few of the top reasons to buy life insurance can be:

• To replace the income of the family in your absence (if you are the bread earner).
• To settle an outstanding mortgage loan or any other personal or business loans.
• To save for a fund created for the education of your children.
• To save for final expenses like funeral costs and taxes.
• To create a fund for financial emergency.
• To supplement your income on retirement.
• To help preserve your estate.

How much life insurance should you buy? You should buy what you can afford. But remember not to be underinsured in an attempt to go after cheap life insurance policy. Again, don’t pay too much for a coverage that you don’t need. So, what you need is a way to be able to determine how much life insurance you need. You may use one of the 2 following methods: 1. Expected expenses method: In this you may first determine the expenses you may have or already have and then calculate the total coverage that you require. The expenses may include:

• Emergency funds
• Oustanding loans
• Educational expenditures
• Taxes
• Household expenses
• Funeral costs

2. The income replacement method: The amount of life insurance that you buy must   be able to replace the current income that you generate. This current income also includes any additional sources of income or any other hidden income like employer’s subsidy, any health insurance premium, and any other perks. Life insurance can be a really good savings option not just for your family after you but also for you when you grow old. So make your investments wisely and enjoy the benefits.