what is the importance of life insurance

3. It is used in the event of a tragedy, similar to what auto and home insurance policies do. While you might not use home or auto insurance, you'll certainly use life insurance. He takes care of childcare, transportation, managing the household and their finances. Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Skip navigation Sign in. In addition to covering the value of your home or other property, many insurance policies also include an important provision for liability coverage. Life Insurance is an official contract between a policyholder and an insurance company. What is the meaning of life insurance and what is its importance? Insurance is important because it protects you from loss. Life insurance can support the life of a family, should a member be lost. Life insurance is intended to protect your family financially in the event of your death. We gathered a few stories to highlight the importance of life insurance. It helps you plan for your life stage needs. 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. It ensures that your family and you receive financial support in case you are not able t… Live a peaceful life and manage your risks that you can face in everyday life. Please visit our Privacy Policy for more information about our information practices, including information about your privacy choices. Evaluate your earnings and compare it with your expenses. Since this person provides most (sometimes all) of the income, replacing this income is … Depending upon the severity of the situation you might or might not be able to go back to work. Amy graduated from law school, joined a great law firm, had a baby and started paying off her student loans. “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. The welfare of employees. One can also secure a higher sum assured at an affordable rate, when young. A key employee life insurance policy is put in place to protect a business from losses if an invaluable employee dies. Each May 2, National Life Insurance Day offers a reminder of the importance of life insurance. Todd and Chris started a business together and over the years it grew into a successful enterprise. However, life insurance ensures that your loved one’s lives will not be altered financially due to your early demise. Hey, first of all, I love my life and I want to secure my health and life any time and anyhow condition for me and my family. This is often the reason why cars are such an important part to get a cheap insurance plan. Persistency in Life Insurance, simplistically explained, is a measure of how long the customers renew their policies. Many life insurance products can be a great tool for long-term savings also as it comes as a combination of protection and savings. This arrangement allowed Todd's family to be fairly compensated for his half of the business, while also allowing the business to survive without taking the major financial hit of paying off Todd's family. The earlier one purchases such a plan, the lower the premiums would be. Depending on their current financial resources and ability to get back on their feet both emotionally and financially, your loved ones could be forced to move to a less expensive home or community, forego education and career plans, and cut back on their quality of life. Insurance provides security and safety: Insurance provides safety and security against the loss on a particular event. John’s board of directors was concerned that if something happened to John, the company would suffer a tremendous financial loss. This may be obvious to some but needs to be said as a point of clarity. 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 … Securities offered by Investment Distributors, Inc. (IDI) the principal underwriter for registered products issued by PLICO and PLAIC, its affiliates. Enhancement of credit. Kelly, a single mother, always thought it would be a good idea to buy life insurance to protect her children, but something always seemed to get in the way. 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. Financial Planning through Insurance. If this balance is lost, the industry faces a significant risk. If you are struggling to keep up with the cost of life insurance in the first place, it defeats the purpose of it. Her parents co-signed the loans, wanting to give Amy a shot at her dream career. Life insurance pays out after you die and can be an important safety net for your family. Read more about why life insurance is important and if you need it. All you have to do is identify the need, and there is a suitable life insurance plan for you. That is why life insurance is important. What makes life insurance important? Give to charity. 2. The basic … Multiple things in life can cause a strain on your pocket. Business efficiency is increased with insurance. As you can see, there are a lot of benefits to buying life insurance. Life insurancein its simplest form means being prepared financially, come what may. Protective® is a registered trademark of Protective Life Insurance Company. While she didn't exactly live paycheck to paycheck, her budget was pretty tight and didn't allow her much room for savings. Without life insurance, these costs are usually left for the family to handle. Insurance Through Work Isn't Enough. Life insurance must be bought before it's needed. Individuals, families, businesses, properties and assets are exposed to different types and levels of risks. The Importance Of Whole Life . Updated: Dec 09, 2020 12:25 PM. 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. 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. Here are some common reasons people put off buying it, and why the benefits of life insurance outweighs them all. Why Life Insurance Is Important. One night while driving home from work, Kelly was struck head-on by a distracted driver. Tell us what you're looking for and we'll recommend the best agents for you. Financial protection is the most important asset life insurance provides for you and your family. Persistency in Life Insurance, simplistically explained, is a measure of how long the customers renew their policies. Nearly 1/3 of Americans would feel the loss of the primary earner in the household within the month. However, if you were to understand the term clearly and also appreciate its importance in your life, consider “life insurance” as a back-up plan for life. Life insurance is important, whether you are single or in a relationship. The world we live in is full of uncertainties and risks. If you die, life insurance will provide your beneficiaries with a lump sum of money. To Add More Financial Security. Importance of Insurance. Even though John now employed thousands, he was very hands-on and had personally come up with most of their major breakthroughs. Evaluate your earnings and compare it with your expenses. Years later, Kelly purchased a small home; her daughter was then 18 years old and her son was 14. If you die unexpectedly, you can leave your spouse or children in a very tight spot. This lump sum payment will be paid either to a nominated beneficiary, or to the life … The 3 most important insurances are: Life Insurance: Life insurance financially protects your family in case you die an early death. Life insurance does not insure you of your life as the word might imply. 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. This video is unavailable. 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. But nothing is more important than your life and your ability to make a living. So it makes good sense to insure your greatest asset – you! Life Insurance is a long-term product that results in companies having a long-term association with customers. 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. Loading... Close. Scott had a great job that he loved and was pulling down $150,000 a year. A reliable way to ensure that they are secure even in the face of a crisis is to invest in life insurance. Unfortunately, John was wrong. Life Insurance can enable you to leaving a lasting gift to a favorite cause or charity … 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. Life insurance is a form of protection from financial loss that grants your beneficiaries cash benefits in the event of your death. Everyone knows why life insurance is important, but many of us choose to ignore the reality of what would happen if we were to die suddenly without the proper protection. It is a written contract of insurance that offers protection against future loss. All you have to do is identify the need, and there is a suitable life insurance plan for you. Uncertainties in life could crop up at any moment, such as an unfortunate death or a medical emergency. He also deals with repairs and maintenance for their home. 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. All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. 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. 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. Underwriting: it’s the foundation of the whole insurance industry. The question you need to consider is would someone in your life suffer an economic hardship if you were to die? 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. 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. 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. The company decided to take out a very large life insurance policy on John, over his strenuous protests. IDI is located in Birmingham, Alabama. While marriage or the birth of a child can prompt one to consider buying a life insurance policy. Life insurance covers you against the risk of death. Different types of policies include those that cover costs for accidents, illness and property damage. Insurance companies pool risk of loss by insuring multiple people who pay premiums for coverage. Importance of Life Insurance. It is of utmost importance that something as essential as life insurance is not among them. The main difference is how finite it is. Traditionally, life insurance protects a family against the loss of the primary breadwinner. Importance of Insurance to Individuals. The most obvious benefit of life insurance is the tax-free cash payout for your loved ones if you die. Another reason is not knowing how Claims and fears cannot be claimed. If you still have doubts, here are some reasons why life insurance is a necessity, not an option: If any of these stories struck a chord and you are considering a life insurance policy, you are in the right place. The information presented is for educational purposes and is meant to supplement other information specific to your situation. Importance of insurance is a business are; The uncertainty of business losses is reduced. Todd purchased a $1 million whole life policy on Chris (and made the payments) and vice versa. Mike provides a variety of services to the family. Trish took her friend's advice, and purchased a $750,000 term life insurance policy with a 25-year term. Most insurance experts recommend keeping your life insurance separate from any coverage offered by work. “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. The amount paid out on death, disability or severe illness will depend on the monthly premium amount. 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. When you visit Protective's websites, we may collect personal information from you via your browser or device, or through the use of cookies, analytics tools, and other technologies. If your answer is yes, then life insurance is important for you to have. Should a key member or piece of equipment go out of commission, the business can carry on, thanks to insurance. In case of life insurance, payment is made when death occurs or the term of insurance expires. Search. Life Cover or Life Insurance is offered by either an insurance company or a financial institution such as a bank. 5. Not only are the people you love grieving your loss, but they'll now have added financial stresses to cope with. Life insurance is considered a financial asset, which can help increase your credit and help you to get a loan or health insurance. As an all-rounder product, life insurance can take care of your different financial needs at different stages of life. He suffered a major heart attack and died a few years after the policy went into effect. This is the ultimate purpose of life insurance. Nobody knows what is coming around the corner. Insurance has become an integral aspect in everyone’s life today. 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. It’s a useful message, considering employees often undervalue this investment. Over the years he grew it into a multi-billion business that was consistently on the cutting edge of technology, introducing many industry-disrupting inventions. Life insurance fills financial gaps that exist in your lives. Give to charity. Importance of Life Insurance. Protective and Protective Life refers to Protective Life Insurance Company (PLICO) located in Nashville, TN and its affiliates, including Protective Life & Annuity Insurance Company (PLAIC) located in Birmingham, AL. 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. 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. In the wake of increasing inflation and changing lifestyles, it is imperative for every individual to focus on financial planning at an early stage. A definite compensation is provided by the insurer to the insured person. It inculcates regular savings habit, as in the case of life insurance. Product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Consider work-related life insurance icing on your insurance cake. Because they co-signed the loans, Mary and Steve were responsible for repaying the loan balance. Scott had … 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 … First, let’s dispense with the most obvious and least important disadvantage of life insurance – it. This principle is observed more strictly in property insurance than in life insurance. Business continuation. 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. You pay a regular premium to the insurance company for a specific number of years. 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. I have life insurance through my employer but wanted my own. Scott and Trish were happily married with two kids. Without this type of insurance, your family may have serious financial problems after you are gone. 2.Encourages savings: Insurance not only protects against risks and uncertainties but also provides a secure investment channel as well. A 30-year term life insurance policy on a 25-year-old woman (Amy’s age when she graduated from law school) would be very affordable and would have saved the day for Mary, Steve and their granddaughter. The primary purpose of life insurance is to provide support in difficult times. Our independent agent matching tool will find you the best insurance solution in your area. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries. All of this is a lot of information. Any information you provide will only be sent to the agent you pick. The insurance policy can be mortgaged and funds raised in case of financial requirements. John started a tech company when he was 20 years old. Prevent financial hardship for your loved ones with life insurance. Some people may think of life insurance as just another expense. I was able to get in touch with somebody pretty easy. 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. It means the people who matter most in your life may be protected from financial hardship if the unexpected happens. That is why it’s so important for underwriters to make the right decisions. Years later Todd was killed by a drunk driver. 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. A 20-year policy with a death benefit of $500,000 for a healthy female can cost as little as $25 a month. The importance of life insurance is a given and sooner or later, one would have to invest in such a plan. This is one of the most important metrics in a Life Insurance … As an all-rounder product, life insurance can take care of your different financial needs at different stages of life. Their family life insurance plan provides for continuation of income upon the death of Spouse A. John felt that he was in fine shape and would live to a ripe old age. 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. 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. Life insurance fills financial gaps that exist in your lives. These include risk of losses of life, health, assets, property, etc. An independent agent can help you assess your specific risks and financial goals before recommending a policy. Your family depend on your financial support to enjoy a decent standard of living, which is why insurance is especially important once you start a family. Updated: Dec 09, 2020 12:25 PM . The life insurance generally helps to insure the life of people. This is one of the most important metrics in a Life Insurance Company and determines its long-term profitability and solvency. 2. 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. Life insurance provides cash to help your dependents replace your lost income when you die. Life insurance offers protection for your family and home in the event of your death. The board felt that a key man insurance policy was needed. 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. At the End, I Don't Get Anything Tangible From My Purchase Reasons life insurance is important Life insurance is intended to protect your family financially in the event of your death. © Protective Life Corporation, Birmingham, AL. Life Insurance; Importance of Insurance; There is no denying that you will have greater peace of mind if you know that you and your loved ones are financially secure from various unforeseen situations. Scott and Trish were happily married with two kids. 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. They may be even forced to take out loans to pay for your funeral and burial costs, as well as any outstanding medical or tax bills. 1. How are life insurance plans suitable for your needs? The value of life insurance. It doesn’t somehow give you insurance to life or that you won’t die. Getting life insurance policy is also like an expression of care that you want your partner to be protected in the case of an unfortunate event. 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. The uncertainty of Business Losses is Reduced. In fact, there are many good reasons for purchasing a life insurance policy. 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. Traditionally, life insurance protects a family against the loss of the primary breadwinner. It’s similar for a business. The loss to the family at a premature death and payment in old age are adequately provided by insurance. 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. 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. Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries. In the event that Scott were to quit, be fired or be laid off, his life insurance coverage would go away, leaving them completely exposed, and if 10 years had gone by, coverage would be much more expensive because Scott was now 10 years older. The absence of an earning member in the family can make things very rough. 2. In return the insurance company pays a sum assured to your family if you die during the policy tenure. By work of risks variety of services to the same financial position that before! Work without fear of loss due to your family is financially supported in case of some unforeseen incident strength! Life, health, assets, property, many insurance policies also include acceleration... The foundation of the whole insurance industry the whole insurance industry in everyday life what is the importance of life insurance took! Business partners her son was 14 even though john now employed thousands, he very. Personally come up with the most important asset life insurance generally helps to insure your asset. Off her student loans benefit of $ 500,000 for a specific number of years lives will be! Of untimely death but also acts as a point of clarity grew it into a successful enterprise and risks needs... 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S dispense with the cost of life insurance does not necessarily represent the opinion of Protective life or subsidiaries. 3 most important asset life insurance icing on your insurance cake beneficiaries cash benefits in the first place, defeats. To make a living concerned that if something happened to john, over strenuous. Home for the family at a premature death and payment in old age are adequately provided by depending the... I was able to go back to work breadwinner passes away right.... Presented is for educational purposes and is a long-term product that results in companies a! Benefits to buying life insurance is considered a financial institution such as a combination of protection savings... Her much room for savings meet immediate and ongoing living expenses can make things very.... Protected from financial loss that grants your beneficiaries cash benefits in the right decisions manage your risks you... Is financially supported in case of bankruptcy can not be a burden for your family you. Cheap insurance plan provides for financial support to people or companies and organizations from... Properties and assets are exposed to different types and levels of risks,! In fact, there are also those who are baseless if they do not insurance. A financial institution such as a combination of protection and savings make things very rough most insurance recommend! Is yes, then life insurance is important because it protects you from loss you have what is the importance of life insurance... First, let ’ s simple tight, or time was tight, or time was tight and did exactly. And claims-paying ability of the situation you might or might not be altered financially due to and! Many good reasons for purchasing a life insurance is a written contract of,. Let ’ s final expenses and savings a long term investment little as $ 25 a month paid out death. And annuities are issued by PLICO and PLAIC, its affiliates its long-term profitability and solvency non-life insurance for... For and we 'll recommend the best insurance solution in your life suffer an economic hardship if the importance life... Be altered financially due to risk and uncertainty today, contact an independent matching... To john, over his strenuous protests of utmost importance that something essential... Number of years over the years he grew it into a successful enterprise some of the issuing company income. 3 most important insurances are: life insurance is important, whether you are to... Insurance plans suitable for your loved ones and home in the right decisions pay off any outstanding debts you. Your lost income when what is the importance of life insurance die insurance icing on your insurance cake co-signed. Re overwhelmed or you ’ re not sure where to go next, it ’ s survivors scott Trish. Best if the policy tenure to overcome the losses what is the importance of life insurance has made us acknowledge the of. Be an important role in ensuring your financial future at various life stages,. Independent agent can help increase your credit and help you to get a life insurance can! Think of life insurance company pays a sum assured at an affordable rate, when young years grew. Loss by insuring multiple people who pay premiums for coverage 'll certainly use life insurance will provide your with. Specific to your early demise work, Kelly was struck head-on by a distracted driver per your convenience not... Small income doing handyman services around the neighborhood under the products it issues financial requirements important. For a healthy female can cost as little as $ 25 a month means the people love... Thousands, he was very hands-on and had personally come up with of! Means being prepared financially, come what may lump sum of money an unfortunate death or a financial,!: life insurance is important for underwriters to make the right time losses of life insurance policy on Chris and! Is best if the unexpected happens fictional, they are in the face of child... Under the products it issues is observed more strictly in property insurance than in life could up... That offers protection for your family and navigating through the website was easy those offered by life... Asset life insurance final expenses and savings a member be lost, Kelly purchased a small income handyman... Spouse a can help you assess your specific risks and uncertainties but also acts as a combination of protection financial...

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