National Life Insurance Day – Is Your Family Covered?
Alex de Wit
Personalised financial planning, affordable investment solutions and award-winning management services for expatriates.
by Infinity
May marked the anniversary that Life Insurance was launched in the US, way back in the 18th century, when the snappily-named Corporation for Relief of Poor and Distressed Widows and Children of Presbyterian Ministers was set up in 1759.
Since then, millions of families have experienced first-hand just what a godsend Life Insurance can be when tragedy strikes.
National Life Insurance Day was a great opportunity to highlight all the benefits that life insurance brings and why we at Infinity believe it is a non-negotiable part of a sound financial plan.
How Life Insurance works
A life insurance policyholder pays regular premiums to an insurance company and in return, the company agrees to pay a death benefit to a named beneficiary if the policyholder dies.
There are two main types of Life Insurance:
Term Life Insurance -
provides cover for a fixed amount of time with nothing payable if the policyholder outlives the contract
Whole Life Insurance -
which covers the whole life of the policyholder and often builds a cash value over time
Six reasons why Life Insurance is essential
1. It can give families much-needed time to grieve
The sudden loss of a family member is always a tough time but certainly easier to bear if the financials are taken care of. Life Insurance payments can be released fast, without waiting for probate, and used to cover short term expenditure, including funeral costs. That’s one less thing for grieving families to worry about.
2. It provides stop-gap finance during a time of loss
Losing a family breadwinner can have an immediate and devastating impact on finances if no life insurance provision has been made. Some families might be lucky enough to have savings to dip into (undesirable as that might be) but others might struggle to meet payments such as the monthly mortgage repayments in the aftermath of the death. Life insurance ensures that the regular bills can keep on being met until a new equilibrium is found.
3. It can be used to pay off debts and loans
Term Life Insurance is often taken out against loans such as a mortgage so that the debt is paid off if the borrower dies. The fact that this insurance is for a defined time period and provides only a death benefit means that it is more affordable with lower premiums than whole life insurance.
4. It can help families stay in their homes
The death of a parent is hugely upsetting for children but Life Insurance does at least ensure that no lifestyle compromises need to be made: no need to move house, change schools or alter the working hours of the now-single parent. Providing this level of security through such a challenging time can help families as they come to terms with their new reality.
5. It can fund a child’s education
As mentioned above, whole life insurance frequently includes a cash element which means that for each premium payment, a percentage is saved. Over the term of the policy, the death benefit decreases while the cash value increases. Certain policies allow you to access these savings via a cash withdrawal or policy loan and this can be used for any purpose, including funding the significant costs of a university education for a child. This method of saving towards a college fund won’t suit all households so it is best to take professional advice from a financial adviser as part of a holistic financial plan.
6. It can ensure a family business stays afloat
Life insurance is a particularly important element of estate planning for those who run a family business. Funds might be needed to provide a lump sum for other shareholders to buy out shares owned by the deceased or to compensate for the loss of a key executive. The requirements of a life insurance policy to cover businesses need careful consideration so, again, professional advice is essential.
The best life insurance for expats in Asia
Whatever your situation, if you have debts or dependents it is difficult to see how having life insurance won’t benefit your loved ones if your life is ended prematurely. And let’s face it, youthful and healthy as you may be, none of us can be sure that won’t happen to us. Preparing for the worst is wise and thoughtful and a way to show your family just how much you love them. It also gives you the peace of mind that you have done everything you can to secure your family’s financial future, whatever life has in store.
Expats in Asia can obtain life insurance quotes from our professional financial advisers. We work with all the best life insurance providers and can help you find the right cover at the right price.
Why not drop Alex a line and find out just how reasonable peace of mind can be?
You can get in touch with Alex here or at alex.dewit.linkedin@gmail.com
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Tilney is an award-winning financial planning and investment company, that builds on a heritage of more than 180 years. They have won numerous awards and their clients include private individuals, families, charities and professionals. They presently look after more than USD30 billion.
At Tilney, your personal wealth is their personal responsibility.
Tilney's award-winning services are now available in Asia exclusively through Infinity, and can likely be applied to both new and existing investments.
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