Does your financial plan include Insurance?
A financial plan should include various crucial items like estate planning, mortgages, credit cards and loans. One important item should be insurance. Insurance is what happens ‘if something bad happens’. People without it will only see the benefit of insurance when that bad thing happens.
Benefits of insurance are manifold! It gives you peace of mind that your loved ones will be taken care of when (not if) you die. Indemnity to cover your loans will prevent your loved ones from inheriting your debt. How sad would that be? Not for you, since you will have departed, but for their memory of you. A loan that they cannot cover could result in your assets being seized to repay it. Could you do that to them?
What kind of insurance will cover my debt?
Insurance that pays when you die. Determine the amount and repayment period of your outstanding expenses and get insurance to match it. Your own death is an expense that will appear somewhere in your life, normally at the end of it.
You most certainly have to create insurance to cover the mortgage on your house or the loan on your car. This way, if you were to pass away while there is still an amount owing, it will automatically be paid off. By matching the term of the loan and the term of the policy, you will only have to pay premiums for the term of the loan.
So, if your car loan has three years on the term and you matched that with a policy, should you pass away in the second year, the policy would pay your beneficiary the full amount of the loan. Only two thirds is needed to pay the outstanding balance.
Many kinds of loans, including mortgage loans, car loans, overdrafts and personal loans can be secured in this way. Even debt on hire purchases of whatever you bought.
Surely you care enough for the ones you’ll leave behind to get insurance!