We all want a secure future for our family and key to this is financial planning. Most of us have a weekly or monthly budget in place, and know that if we stick to the budget there will be enough money in the bank to cover the bills.
Holidays, Christmas, car repairs and things like the kid’s school uniforms are also normally budgeted for, many people save for these items. However, studies show that many of us do not have any money in reserve for unexpected, yet common, events like serious illness, the loss of a job or the death of a close family member. These events cause a lot of pain, stress and heartache, which is often made far worse because these events put the family under extreme financial stress as well.
The wisdom of making funeral plans now
Nobody really wants to think about these awful events, so there is a tendency for people not to put the necessary measures to help them to cope financially in place. This is understandable and only natural.
However, ignoring the possibility is not a wise approach especially when it is relatively easy to make sure that your family has the money they need to cope. For most people the best approach is to invest in insurance policies to provide coverage in the event of a job loss, serious illness or a death in the family.
Buying these kinds of insurance will make a huge difference to your family. Provided you buy the right level of coverage, you and your family will have the cash you need even in the most difficult of situations.
Life insurance to cover the cost of a funeral
Life insurance is important and the right policy can provide you with serious illness coverage too. That way should you or your spouse become terminally ill your family will have access to funds to help you to cope with the additional costs of being ill and to be able to continue to enjoy life and spend precious time as a family.
With the price of funerals, continuing to soar funeral planning is becoming increasingly important. Most families do not much money sitting in their bank accounts. Currently, the average cost of a funeral, in the UK, is £8,000, and many expect that cost to continue to rise. As a result, many families get into long term financial difficulties when they have to find the money to pay for a funeral.
Put aside an emergency funeral fund
Saving regularly, so that you have a substantial emergency fund available is another way to take care of your family’s financial future. However, this approach is only a good idea if you can resist the temptation to dip into your emergency funds to buy a dream holiday or car.
I appreciate that this is a depressing subject, but, as you can see, not planning financially for these awful life events has serious consequences for you and your children. Therefore, it really is worth sitting down and addressing the issue of how you are going to provide financially for your family in the event of a job loss, terminal illness or death.
When it comes to buying life insurance there is a bewildering choice of policies out there. Finding the right policy for you and your family can be done, but requires a little research.
This is an overview of the main types of insurance. The two main types of life insurance are term or whole life insurance.
Term life insurance
Term life insurance only pays out if you die, but cannot be traded in for cash at any point. This is the most common form of life insurance
Whole life insurance
A whole life policy does have a cash value and can be surrendered for money should you get into financial difficulties. If you do not surrender your policy before you die, your family will receive a payout in the event of your death.
Which is best a life or term policy?
The debate over term versus whole life insurance goes on. Some experts recommend that if you are under 40 years old and do not have a family disposition for a life threatening illness, go for term insurance, which offers a death benefit but no cash value.
Whole life offers both a death benefit and cash value, but is much more expensive. The Wall Street Journal has reported that half of all cash value policies are surrendered within the first seven years, making the coverage very expensive because commissions and fees limit the cash value in the early years.
With a traditional life insurance policy, the premiums stay the same over the life of the policy. The policy stays in effect until your death, even after you have paid all the premiums, which can often be paid up within a certain amount of time. A cash reserve is built up, but you have no control over how it is invested.
There are some other kinds of life insurance available. Here is a quick overview of the most common ones.
Variable Life insurance policies
Variable life polices build up a cash reserve that you can invest in any of the choices offered by the insurance company. The value of your cash reserve depends on how well those investments are doing.
Universal Life insurance policies
You can vary the amount of your premium with Universal life insurance policies by using part of your accumulated earnings to cover part of the premium cost. You can also vary the amount of the death benefit. For this flexibility, you will need to pay higher administrative fees. Check out www.thatsinsurance.com for more details.
Buying enough coverage
As with any policy, you need to think about what you are buying and what you are getting for your money. The idea of life insurance is to make sure that the costs of your funeral are covered and that the needs of any family you leave behind are covered.
You need to understand the details of the policy you are buying. The ThatsInsurance site is a good place to educate yourself. Not only are policies compared on this site, the details of what the various terms and jargon mean are all explained.
Funerals are something that most people do not really want to think about. Of course, this is natural. However, we have to accept that at some stage we are all going to die, so it is very important to plan our funeral. A very convenient way of doing this is to buy a funeral plan. […]
How much life insurance or life assurance you need depends largely on your personnel circumstances, for example whether you’ve got a mortgage or children. Here we look at some of the factors you need to consider. The amount of life insurance cover you need depends on the needs of your dependants. It also depends on […]