Every person has financial obligations, they have spouses, parents, children, employees, and others who depend on them
Those “dependents” count on your being there. They assume you will stay and support their needs. But, considering all that can happen to you, they are sometimes disappointed.
It takes life insurance to assure their continuing financial stability. But, putting together a solid financial plan means determining what your death would cost those who survive you. You need a human life value calculator to put some numbers on your financial worth.
That process should help you and your dependents understand your value now and in their future, should you die. When people focus on the lump sum benefit, they often lose sight of the specific benefits of life insurance.
As Russ Alan Prince said in Forbes, “You should buy life insurance when you care deeply for someone or want to make a difference in the world, and your financial resources aren’t able to fill the financial gap if you were to die.”
5 surprising expenses covered by life insurance:
Childcare costs
Small children don’t expect or need large bequests. What they need is income to cover their childcare. The spouse and children need support for childcare while the spouse returns to work or to remain a stay-at-home parent.
If the children are older, their care might require funds to continue their education in high school and college. Your life insurance policy should be integrated with your financial plan and will where you can define how the life insurance proceeds will serve the children.
Comfortable housing
Life insurance proceeds allow your family to continue their housing lifestyle. You don’t want them to seek new living arrangements in the midst of their grief.
It would make sense to work these plans out in advance. It will reduce the stress if the partners agree in advance on what they need in terms of funeral expenses, mortgage payoff, or alternative housing.
Spousal care
If the partners do not have children, they should agree on how the insurance benefits will be used. For example, the surviving spouse may be better employed with a reliable and significant income that reduces needs for sustaining income. But, they might also agree that joint and individual debts, like car loans or credit cards, should be paid.
If the surviving partner is disabled, the needs for basic and extended care add up. In such cases, you need professional help in setting a value on the needs and creating a system for allocation.
Business continuation
If you are a principal in a small business, the partners and employees are your dependents. If you disappear, their livelihood also ends.
Your life insurance can protect the interests of your business partners, the employment of the staff, and the interests of your family in the business continuation. However, you need to connect this with your financial plan, so everyone understands how the insurance proceeds will be assigned.
Final expenses
Most people think life insurance is primarily to pay for funerals. And, it can cover the cost of your funeral. But, “final expenses” might also include outstanding medical costs not covered by your health insurance.
Depending on your plans, it might include a cemetery plot, marker, or post-funeral celebration of your life. And, it might include outstanding taxes, probate costs, and unpaid bills.
Final word
You should review your life insurance coverage periodically because your human life value will change over time. As Huffington Post says, “Life insurance can also be quite flexible. If your lifestyle changes while you are insured, you can always increase your life insurance by buying more. If you decide that you no longer want or need life insurance, you can simply stop paying the premiums, and the policy will end without any additional fees.”
So, building a relationship with your life insurance provider can help you afford the coverage you need at different phases of your life.
About Aegon Life
With a complete product suite of life insurance plans, superior technology, and customised service, Aegon Life Insurance Company Limited launched its pan-India operations in July 2008. As a joint venture between Aegon – world’s leading financial services and Bennett, Coleman & Company – India’s leading media house, Aegon Life Insurance adopts a local approach to facilitate customer interaction. Our vision to be the most recommended new age life insurance company has enabled us to leverage digital platforms that bring transparent solutions to customer needs. Our financial planning and investment solutions include term life insurance plans, pension plans, unit-linked insurance plans (ULIPs), health insurance plans, child education plans, and more.
