The Role of Life Insurance in Securing Your Family’s Future

Life insurance is a valuable financial tool that comes in various forms. Term insurance, Whole life insurance, Endowment plans, and ULIPs are common types, each offering unique features and serving different financial purposes, including protecting people you care about. Of the many valuable benefits life insurance provides, there are two main benefits: maturity benefit and death benefit. A maturity benefit is paid out to you if you outlive the entire policy term. The death benefit is what your family receives if you pass away during the term of the policy.

Choosing the Right Life Insurance Cover

When buying life insurance, choosing the right life cover (sum assured) is key to ensuring your loved ones are financially protected. Let’s understand some of the key factors you must keep in mind:

1. Assessing Needs

The ideal life insurance coverage amount must be determined based on an assessment of outstanding loans, monthly household expenses, children’s education and marriage costs, lifestyle maintenance expenses, emergency funds, medical insurance costs, and long-term savings and investment needs. A term insurance plan provides extensive coverage at the lowest cost as compared to permanent life policies such as whole life.

2. Income Multiplier

A general rule of thumb is to choose a life cover of 10-15 times annual income. Higher covers should be chosen if there are more dependents or liabilities.

3. Flexible Plans

Opting for a flexible plan where the sum assured and policy tenure can be increased or decreased based on your evolving needs is wise.

4. Regular Reviews

As lifestyles, expenses, and responsibilities change, the ideal coverage amount must be reviewed and updated regularly to ensure adequate protection.

Understanding Life Insurance Death Benefit

• UK based Zimbabwean divorces wife of 33 years over conjugal rights
• Chipaz bares his ‘soul’ on Jah Love
• New perspectives: Role of private sector in resource mobilisation
• Matobo councillor, villagers clash over land

 

One of the key benefits a life plan offers is the death benefit. If you pass away when your life insurance policy is active, your chosen beneficiaries will receive the death benefit payout. This usually equals the sum assured when you buy the policy. The payout can be a one-time lump sum or in instalments over time.

 

The death benefit your family receives is generally tax-free. To claim it, your family has to inform the insurance company and submit documents, and the claim will be verified. Timely processing depends on fulfilling all requirements.

Importance of Death Benefit for Family

The life insurance death benefit is valuable for your family's future for the following reasons:

1. Income Replacement

The life insurance death benefit can replace your income to cover household and other expenses in case of your untimely demise. This ensures financial stability for your family.

2. Loan Repayment

The death benefit can help repay any outstanding loans, such as home, vehicle, or personal loans, so grieving family members do not bear the burden of liabilities. It provides them with debt relief.

3. Major Future Expenses

The payout can fund major future expenses such as children’s higher education and marriage, which require vast sums of money. This secures the family's future.

4. Maintaining Standard of Living

The death benefit enables your family to maintain the same standard of living they were used to previously. Their lifestyle is not compromised due to loss of income.

5. Financial Independence

The payout gives the surviving spouse and children financial independence and stability during the difficult time. They do not have to depend on others.

6. Supplementary Income

If the death benefit is invested wisely after careful financial planning, it can generate supplementary investment income to support the family's needs.

7. Peace of Mind

Knowing that the death benefits payout will protect your financial interests gives you immense peace of mind and assurance that your family will be well cared for.

Conclusion

When buying life insurance, evaluate your family's needs and expenses, and choose adequate life cover to ensure maximum protection. Term life insurance plans offer the most affordable pure life protection. Secure your family’s future today with the right life insurance plan and give them the financial security they deserve.