Life insurance is an important type of coverage that can provide financial protection for your family and loved ones in the event you pass away unexpectedly. What many people don’t realise is that it’s not just about death benefits though; life insurance can also have living benefits, like money to pay for long-term care or a tax-free cash account.

There are many reasons why people choose to buy life insurance. Here are just eight of them:

  1. To Provide Financial Security in Times of Need – Life insurance can help provide your family with financial security, even if something unexpected happens to you. This helps cover any costs that you may leave behind if you were to pass away suddenly.
  2. To Replace Lost Income – Most life insurance policies also pay out a lump sum death benefit upon your passing. This can help replace any lost income caused by your death.
  3. To Pay Off Debts & Final ExpensesLife insurance can also help ensure that any outstanding debts or final expenses (e.g. funeral costs) are paid for, so your family isn’t left having to bear this burden financially.
  4. To Provide Education Funds For Your Children – Depending on the policy, life insurance may also be a great way to set aside money for your children’s education expenses.
  5. To Help Start/Maintain A Business – If you have a business, life insurance can provide a much-needed cash injection to start or maintain the business in case something happened to you.
  6. To Provide Investment Opportunities – If you have a life policy with a cash value, you have the ability to withdraw money or borrow against your policy (but remember you will have to pay this back) to use as an investment opportunity.
  7. To Ensure Peace Of Mind – Just knowing that you have a life insurance policy in place can give you and your family peace of mind.
  8. To Help With Estate Planning – If you have an estate plan in place, life insurance can help to ensure that all of your last wishes are fulfilled, including any special gifts you wish to leave for family and friends.
  9. To Act As Surety For Financial Liabilities – If you take out an auto or home loan, the lender may want to see some form of guarantee that you have protection in place to ensure the debt can be repaid in the event of your premature death. Term Assurance that has a period of cover matching that of the tenure of the loan can provide that guarantee and so assist you in securing that much-needed finance.
  10. To Assist You With Covering Costs If You Fall Critically Ill – It’s not all about when you pass away, it’s about making life more comfortable for when you’re living too. Some illnesses can be serious and impact your life critically but may not result in death: you need time and money to get treatment and recuperate and life assurance with critical illness cover provides just that. 

The policy pays out an agreed sum when you contract a critical illness specified under the plan (think cancer, heart attack, etc) so if you buy life insurance with critical illness cover, you can use the money to pay bills, cover living expenses, clear debts, and also help pay for any treatment not covered by your health insurance.

You could also use the money to pay for a “bucket list” item to cheer you up whilst you are getting better: taking a trip, visiting a place you’ve never been to before but always wanted to, buying that treat or luxury item that you’ve always dreamed of. Keeping your spirits up and having peace of mind are both important in the recovery process, so critical illness plan proceeds can really help with that.

Final Thoughts

Overall, life insurance is an important part of any comprehensive financial plan and can provide financial security and peace of mind to your loved ones in the event of your death. It can also help you to make the most of life when you’re living! Protecting short-term financial liabilities and working towards specific savings goals such as educational fees, wedding planning for your children, and even helping them buy their first home, are all ways in which a life insurance plan can work with you whilst you’re still around, so speak to an insurance expert before you buy life insurance to learn more about the different types of life insurance policies that are available, and which would be the best option for you.

About Author

Rachel Al Mughairi

About Author

With over 34 years in the international insurance industry in a variety of senior management roles, and as holder of the Diploma in Insurance from the Chartered Insurance Institute, Rachel surely knows her insurance! With experience in London, continental Europe and the Middle East, Rachel is here to share her knowledge and help you understand more about insurance products in this easy-to-understand series of videos and blogs.