What Role Does Life Insurance Play in Financial Planning

Your financial planning is essential for all of your long-term financial goals. However, you might have many goals, and they are usually not equal – some of them are more relevant and important than the rest. Where should be a place for life insurance in your financial plan? How important is that goal? If you ask any good financial advisor, they’ll tell you that life insurance should be a fundamental part of your plan. Different kinds of insurance will protect you and your loved ones in different ways against the costs of accidents, illness, or death. Therefore, let’s take a look at some of the most important roles life insurance plays in your financial planning. 

It is one of the most excellent tools for saving and investing

Saving and investing the money is the core of every smart financial plan. Life insurance is an excellent tool for both of these economic activities. Not only that you are going to create long-term financial security, but you will have a valuable resource for any backup plan. For instance, in the future, you might not be able to work as much as you do now, but you might want to invest. Fortunately, you will have the resources for that! Over time, your life insurance policy will grow, and you will receive more benefits and bonuses which could positively affect your investing approach.

It often secures your loved one’s finances

Backup plans are essential in any sphere of life, especially in the financial aspect. That is why people often opt for permanent life insurance. They want to have the solution for potential financial problems of their loved ones. For instance, a policyholder can release their financial assets to the family members or beneficiaries in any way that suits them the best – monthly or yearly installments or sum payments. It could be beneficial in multiple ways, not only if your loved ones find themselves in financial troubles. On the contrary, they could use that money for smart investments and further savings.

It covers the risk of loans and debts

Many people share the same fear and concern throughout life – they don’t want to pass any debt or credit to their family members. And that’s completely understandable. However, that is precisely one of the most significant benefits of a permanent life insurance policy. It will cover all of the outstanding debts and loans, and you will have no fear of transferring these financial obligations to your loved ones. Of course, the amount of your debt cannot be bigger than the amount of money you have on the policy.

It could be a resource for mortgage

You might find yourself in a difficult financial situation from time to time, but payments and taxes do not care about your problems. Furthermore, they could produce enormous stress for you and your family members. You will have to secure the resources to pay your bills on time. The life insurance policy could be your best friend during these days. It will provide you with the money you need for all these taxes, and will also create the space for you and your family to recover financially.

It ensures necessary funds for school and college

No one in this world wants to leave children and grandchildren without enough money for education. That mustn’t happen! Education is one of the biggest tasks for every young man and woman, and there should always be enough resources for books, schools, college, etc. However, there are different ways you can influence how their education is financed. When it comes to insurance, you can leave your children the gift of knowledge by factoring educational expenses into your life insurance policy. This could be a huge deal for all your family members since accumulating enough money for the college costs could often be a big problem.

As you can see, life insurance is crucial for an excellent financial plan, mainly because of saving and investing. However, it also plays a significant role in terms of security, as well as covering the necessary expenses of your children and grandchildren. In other words, there is no financial plan without a life insurance policy.

Tracey Clayton is a working mom of three girls, passionate about traveling, marketing and everything tech related. Her motto is: “Live the life you love; love the life you live.”