August.16.17Insurance
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Money Matters with Nimi
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As morbid as this sounds, do you ever think of the worst-case scenario? What would happen to your family, your beneficiaries and loved ones if your life were suddenly cut short? Can they afford to lose you? Could your family or dependants pay for the funeral, organise the family finances, service any outstanding debt and continue with the standard of living you have worked hard to provide for them? Or, would they face extreme hardship in the event of your demise?

Sadly, there are so many extreme things that threaten our lives or existence; terrorist attacks, life-threatening diseases such as cancer and now, the recent scourge, Ebola. The Lagos State Government, in conjunction with the Federal Government, is introducing life insurance to health volunteers who are most at risk. Do you have life insurance in place?

We tend to go through life thinking that bad things only happen to “other” people and not to us, or our loved ones. The majority of us thus ignore the need for insurance until a major mishap or setback occurs; it is then that the impact of inadequate insurance coverage becomes glaring; but by then it is far too late. No matter how meticulous you are with your finances, failure to purchase adequate insurance can impair your financial future and put you or your loved ones in a desperate situation in an instant.

The main objective of life insurance is to replace income that would be lost should the policyholder die. Life insurance can pay your dependants a lump sum or regular payments; this death benefit can help your family to meet pressing financial needs such as your funeral costs, ongoing living expenses such as rent or mortgage payments, food, clothing, transport costs, medical care and of course to ensure that your children’s education is not curtailed for a lack of funds. Would your spouse be able to pay school fees without your income or maintain the lifestyle you worked so hard to achieve?

There are various life insurance policies offered by leading insurance companies. Term life insurance runs for a fixed period of time, such as 5, 10 or 25 years. The death benefit is paid out if you die during the term of the policy. A whole-of-life policy on the other hand, will pay out no matter when you die, as long as you have kept up with your premium payments.

Insurance offers you cover in return for a premium. It is easy to overlook these payments; don’t lose your insurance by skipping your premiums. It sounds obvious but you must read your policy carefully to be sure that it provides the cover you need. Most policies have some exclusions, that is, things that they do not cover. You must be fully aware of what is excluded.

Insurers take into account a number of factors in determining the premiums. They will want to know your age, occupation, and state of health. Lifestyle issues such as your weight, alcohol consumption and whether or not you are a smoker, will come into play.

Do remember that life insurance usually covers only death and may not cover you for illness or disability; you will need to purchase critical illness or disability insurance separately. Do read the small print so that you have absolute clarity regarding what your policy does cover.

If you don’t have an employee benefits plan or an emergency fund in place, income protection insurance and critical illness cover are worth considering. Critical illness insurance will help you cover expenses if you suffer from one of the illnesses or injuries specifically mentioned on your policy; critical illness policies have very strict criteria.

Many people mistakenly believe that they don’t need to bother with life insurance until they have children. Indeed, single people often feel that they don’t need life insurance because no one depends on them financially. Yet the reality in our society is that many single people provide financial and other support for aging parents or siblings, or may be carrying some debt.

Nowadays, most families depend on two incomes to make ends meet and to be able to achieve the families long-term goals. Would your standard of living drop, would your children’s education be affected? Life insurance will help to make sure that your family goals don’t die with you.

Are you a single parent? A single parent is usually the primary breadwinner. With so much responsibility resting on your shoulders, you need to have enough life insurance to protect your children’s future.

Estate tax or death duties can be substantial particularly with large estates. The proceeds of a life insurance policy are payable immediately, allowing heirs to take care of estate taxes, funeral costs, and other debts without being forced to liquidate other assets or sell property, often at well below their true value. A well-structured policy can offer some significant tax advantages; your tax advisor will be able to advise you on what is available.

The loss of a loved one is one of life’s greatest traumas. But don’t make things worse for your loved ones by leaving them in financial difficulty in addition to the emotional stress. Life insurance one of a number of ways to help to make sure that they will be provided for. The premiums that you must pay for insurance coverage is far less than if something dire happened and you had to bear the full brunt of a mishap. If you don’t have the necessary insurance cover, whilst you continue to pray, do make this one of your financial priorities.

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