Make sure that your loved ones are financially secure
No one should underestimate the devastating impact that the death of the breadwinner in a family can have upon the family’s members. The initial impact is, of course, entirely an emotional one. However, once the immediate period of mourning has been undergone and the funeral arrangements have been and gone, the stark reality of life and the financial implications of the death of the major breadwinner come to the fore. This is the case regardless of the personal circumstances of the deceased.
However, inevitably, the issue of finance is put into a much sharper focus if the deceased is relatively young and, particularly, of there are children, whose entire financial future may depend on the provision made by the deceased to insure against his death.
The manner in which one can provide at least some form of solace for one’s family in the event of one’s death is by taking out an effective life insurance policy.
How Much Cover?
The question of how much life insurance you should take out is similar to asking how long is a piece of string!
. It is also one that is not always easy to
answer at the time when it might be best to take out insurance. . As
a general principle, so long as you do not have any form of
pre-existing illness or condition, the best time to take out life
insurance is when you are young.
Of course, young people are less likely to die than older people. This means two things. Firstly, the insurance company is unlikely to be required to pay out on the policy for a considerable period of time, thereby preserving their cash for longer. Secondly, and equally important, it means that the insurance company is likely to receive a considerable number of premiums over the years, allowing more and more funds to go into the insurance company’s funds. The premiums are likely to be far lower the younger the policyholder is. It therefore seems obvious that the best time to take out life insurance is as soon as possible. Yet very few young people do this.
Why Start Later?
The answer to the question of why people do not take out life insurance at the time that the premiums are lowest is because of several factors. The first of these is that young people, either leaving university or on the bottom rung of the employment ladder, have financial commitments that they consider to be far more pressing than the need to take out life insurance. Students often have significant loan repayments that they need to make. Often they have credit card debts too. They and other young people who are relatively recently into the employment market are looking to get into the housing market too.
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