Life insurance
It is been opined by several financial experts that not only is life insurance essential to have but forms the basis of good financial planning. The reasons for this are summarized below:
A good whole life insurance policy is vital and can mean the world to your dependents when you pass away.
Income for your dependants
In the event of your death, life insurance serves to replace the income for your dependents who may have relied upon you financially. This income is also greatly beneficial if the employer sponsored benefits of the spouse or partner is reduced after death.
Funeral expenses and taxes
Life insurance can help to pay the final expenses such as burial and funeral costs, probate and other estate administration expenses, which are typically not covered by health or other insurance policies. It will also help to pay estate taxes so that the heirs are not required to liquidate other assets or receive smaller inheritance.
Inheritance
Life insurance can serve as an inheritance to your heirs in the absence of other assets by naming them beneficiaries.
Charity
You could make a charity the beneficiary of your life insurance, which will allow you to make a much larger contribution if you had donated the cash equivalent of the policy’s premiums.
Source of Savings
Some life insurances create a cash value, which if not paid a death benefit, can be withdrawn or borrowed with the permission of the owner. Paying life insurance premiums are usually prioritized and thus become a sort of forced saving plan. Moreover, the interest credited is tax deferred or tax exempted in some cases.