Life insurance isn’t necessary by any government standard, but you may want to rethink not having it. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured’s death. Why is this important to you? Today, I’m going to discuss why life insurance is important and things you need to know about it when choosing a product.
Why Life Insurance Is Important
If you have someone who relies on you, life insurance is important and a must-have. You have family members you take care of, whether that’s a spouse or children and you help provide the food on the table. If something happened to you, would your family be able to continue to live comfortably without your financial input? If not, life insurance is for you. Life insurance doesn’t just add a monetary value to its recipient’s life; it also helps for the inevitable consequences that come with the loss of a life. Life insurance is helpful because your family should not have to worry about financial obligations when they have just suffered a loss.
Roles of Life Insurance
There are four roles in a life insurance policy: the insurer, the owner, the beneficiary, and the insured. Each role has a specific responsibility when it comes to the life insurance. First, the insurer is the insurance company, who is responsible for paying out claims. Next, the owner of the policy is responsible for premium payments to the insurance company. The person who is insured is the person the policy is based upon. Finally, the beneficiary is the person, trust, or other entity due to receive the insurance claim.
Life Insurance Is Protection, Not Investment
It is important to understand that life insurance is a tool for risk management and not an investment. Some life insurance policies have investment features, but there’s usually a better more efficient tool. Life insurance can help you rest easy, knowing your family will be okay. Do you want to provide your family with the peace of mind of knowing your final expenses are paid for? If you die, don’t you want to still be able to provide the means of going to college for your child? If yes, then you need life insurance. Life insurance is important because the policies will help your family and protect them financially when your time is up.
Since insurance is oftentimes overwhelmingly confusing, we want to shed light on this industry by answering YOUR questions. So if you have any questions or concerns, comment below and your question may be the topic of our next video!
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