Life is a journey of different experiences at different stages all throughout. When we are young, healthy and energetic it is possible to find millions of ways of earning our livelihood. We have to earn and plan for the future simultaneously. The problems start occurring during the difficult times such as medical tragedies or old age. Therefore, planning for the future is a necessity while keeping in mind the financial independence of self as well as our family.
Buying a life insurance policy at the right time can certainly play a crucial role in making you financially independent. Right investment at the right time is the key to future planning. We can always foresee the major future expenses that will occur in our family. Keeping that in mind, plan for their fulfillment when you can manage to have surplus aside from your income.
The first question here is that – How do we define financial independence?
Financial independence is not only about managing your day to day expenses on your own. It relates significantly to the major expenses that we need to cater to- such as the marriage of children, their education, birth and death functions etc.
In order to understand how life insurance can help us in becoming financially independent we will first discuss the two types of life insurances:
Term Life Insurance
In this type of insurance, people invest in the policy for a specific period of time keeping certain goals in mind. For example, Mr. X invested $500 per month for 10 years keeping the higher education of his daughter in mind. To find more read this.
Whole Life Insurance
In this type of insurance, people invest their money by keeping their loved ones in mind. The nominee of the policyholder gets the money in case of their death.
Now, how these life insurance policies will help us in gaining financial freedom?
Here is the Explanation
Helps in Paying Off the Debt
If you have borrowed a loan and do not have an immediate sum of money to pay it back, you can use your life insurance policy. Most of the policies have the provision of allowing the policyholder to withdraw from the accumulated sum (through policy premiums) without any significant rate of interest if paid back in time.
You can use this facility to pay off your highly charged debts. Find out more about paying off the debt, in this article.
You Can Borrow Loans on Your Policy
If you hold life insurance policy and need to borrow loan at any time- you can borrow loan on your policy. Many people take advantage of such policies when the challenging family situations appear and they need to borrow money. Instead of going to money lenders or running through the banks for the loan, availing loan on the policy is much easier and economical.
Supports Your Family Finances
If you are the primary source of earning for your family then, life insurance is just the right thing for you. It covers the untimely death of the policyholder by giving financial cover to the family members.
In case of accidental and untimely death of the primary earning member, the other family members get stranded in difficult situations. If your family depends on your income for their survival, you need to make arrangements for their future.
The optimum life insurance cover will make them financially independent even when they do not have a regular source of earning. With the money of your policy, they will be able to get a replacement of your income and lead a comfortable life without compromising on their standards of living.
Goal Oriented Insurance Schemes
If you have kids then planning for their schooling and college is inevitable. With goal-oriented insurance schemes (term insurance plans) you can secure their future education as well. These days the expenses that incur for giving higher education to children from desired educational institutes are really high.
You need to prepare for future keeping in mind the uncertainty of life. Even if something tragic occurs at the time of education of your child, they will not have to compromise with their education when you have done adequate planning for their future.
Similarly, there can be other goals that you can link with the term insurance schemes such as buying of the house, birth of baby etc.
Coverage of Medical Expenses
Medical expenses have touched the sky these days. In order to avail good medical facilities, one needs to draw out a major chunk of their savings or salaries. However, if you have life insurance policy your medical expenses will be covered under it. You can get the treatment in the best hospitals without spending any significant amount. Medical facilities are one of the biggest advantages of gaining financial independence with life insurance cover.
Many applicants of burial insurance schemes or whole life insurance plans are concerned about their funeral expenses. They do not want their family members to bear the expense of their burial ceremony and therefore they invest in optimal insurance plans.
Buying whole life insurance plans also can cover your funeral expenses and leave a crucial crunch for your family members to pay off your pending medical bills. We have met people who do not want to be dependent on anyone for their expenses until their last. Life insurance plans are meant to suffice this purpose. When you die, you carry the sense of dignity along with!
There can be numerous reasons to buy life insurance plan but gaining financial freedom is the most important one. There have been cases where people have earned really well all through their lives but retired in meek poverty. This happens because of the lack of adequate planning.
When you are an earning hand you can easily afford to spend a few bucks every month towards life insurance scheme. Such investments turn out to be day savers when the time comes. Keeping in mind the uncertainty of life, one has to secure the future of their family members along with their own which is possible only through life insurance schemes. Proper research and planning should be done to find the optimal schemes and investments should be made accordingly.
We know the future is unknown but what we can be sure about is that we can ensure it financially through life insurance policies.