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The only thing which is constant in this world is change. And whenever there is a change, an uncertainty comes along with it. Our ability to survive and thrive depends upon how well equipped we are to deal with change and uncertainty. All of this couldn’t have been more relevant than it is in today’s pandemic stricken world. We are facing uncertainty in every aspect of our lives, ranging from our own health to the economic health of our country.
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The pandemic reminds us every single day that how ugly it can get if we are not prepared for the uncertainty. In order to avoid feeling helpless and hopeless in the face of uncertainty in future, we should make insurance an integral part of our financial planning. Insurance is the best tool we have to deal with uncertainty as far as our financial health is concerned.
There are many kinds of insurance including life insurance, car insurance, health insurance, homeowner insurance, and business insurance. We will talk about life insurance and health insurance in particular as they are relevant for everyone and are an essential part of financial plans. There are a number of benefits of insurance which makes it an integral part of financial planning. Let’s take a look at some of those benefits.
· Protects your savings: life insurance protects your funds by acting as a replacement for the expenses in case of medical emergencies. If you don’t have an insurance and you have an accident or become seriously ill, all your savings will be spent on your healthcare. But if you have an insurance, you won’t have to worry about emptying your saving funds and you will be able to use those savings on things you are actually saving for.
· Protects your family: We often worry about what will happen to our families once we are gone. This thought can be even more horrifying for people who are sole breadwinners of their families. Therefore, by getting life insurance, you can ensure that your family’s needs are taken care of even after you are gone.
· Protects your mind: A sudden hit on one’s savings can also put a major strain on their mind. Sometimes, you might not have sufficient savings to deal with emergency situations. The fear of running in to such situations always looms over our heads. And most importantly, the mere thought of family members not being able to sustain themselves after we are gone can be very stressing. To avoid all these stressing thoughts and fears, you can buy life insurance. It would do away with all these fears once and for all.
· Serves as an investment: There are types of life insurance like variable universal life insurance which can serve as an investment in addition to providing a safeguard against uncertainty. Such kinds of insurance can provide you with high returns. Thus, you can get to your financial goals quickly if you buy such insurance.
· Pays off your debts: life insurance can be used to pay off your debts, credit card loans, house mortgage, or settle any other liability that you might have. Therefore, if you have a life insurance, you won’t have to worry about passing over all your debt to your family after you are gone. Your insurance can be used to settle all your liabilities.
· Provides tax benefits: Death benefits are generally tax free to the beneficiaries. Therefore, they will get a lump sum of money without worrying about paying huge amounts in taxes.
· Higher savings if bought at young age: If you buy a life insurance at an early age, you will have to pay low premium rates. But if you buy the same insurance later in your life, you will have to pay higher premium rates. Therefore, it is important to add insurance to your financial plans early on in order to avoid paying higher premium rates.
Before you start looking at different insurance plans to see which suits you best, we want you to take our quiz to find out your Financial Quotient (FQ). It will give you a very clear idea of your financial knowledge and help you improve.
So, take the quiz and find out your FQ! Click here to analyse your FQ for free...