{"id":918,"date":"2020-06-07T15:37:45","date_gmt":"2020-06-07T15:37:45","guid":{"rendered":"https:\/\/www.cashvisory.com\/blog\/?p=918"},"modified":"2020-07-09T08:33:39","modified_gmt":"2020-07-09T08:33:39","slug":"life-coverage-the-most-important-financial-product-youll-ever-buy","status":"publish","type":"post","link":"https:\/\/www.cashvisory.com\/blog\/life-coverage-the-most-important-financial-product-youll-ever-buy\/","title":{"rendered":"Life coverage: The most important financial product you’ll ever buy"},"content":{"rendered":"\t\t
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At some point of time in life, someone, somewhere has tried to sell you an insurance policy. The idea of insurance may remind you of experiences of hard-selling, pushy sales people, and incessant nudges from that annoying relative \/ friend, just to get you to sign up for a policy. So, why does that happen? The answer is simple – insurance needs to be \u201csold\u201d. Most people do not understand the importance of insurance and will not actively seek it out. This lack of knowledge amongst the public and the insurance companies\u2019 aggressive selling techniques has brought the insurance industry a bad reputation and has created a negative connotation for insurance itself. In this blog post, we aim to address this knowledge gap and explain why life coverage is the most important financial product you\u2019ll ever buy.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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What is life coverage?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Life insurance i<\/span>s a contract between an insurer and a policyholder where the insurer guarantees payment of a death benefit upon the death of the insured, in exchange of premiums paid.<\/span> By setting aside less than 1% of your income, you can protect your loved ones from financial risks in the event of your passing.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Why is life coverage important?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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College sweethearts Raj and Priya were ambitious young adults with big dreams. They had recently gotten married and were excited to build their life together. In an unfortunate turn of events, Priya tragically passed away from a car accident. Raj was left behind taking care of their 2 kids, paying their mortgage and study loans, and managing all their expenses with only half the household income.\u00a0 The sudden financial burden exhausted all their hard-earned savings within a year, putting additional strain on the family on top of the grief of losing his partner.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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The above example is for a dual income family. Now imagine a situation where the sole breadwinner is not insured. Any unfortunate loss of their life could be catastrophic for the family, threatening their very survival.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Life coverage helps us prepare for such eventualities, to help mitigate the financial impact of someone\u2019s passing. For instance, a life insurance payout would not only have helped Raj maintain his savings, but also helped to make up for the drastic dip in the household income.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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The Financial Needs Hierarchy Pyramid demonstrates the critical role of such financial protection in your overall financial planning and goals. It is important to build a solid foundation by insuring yourself for emergencies before you proceed to the higher levels of growing your wealth and building your legacy. No matter how much you save and invest, if you haven\u2019t managed the financial risks with the appropriate insurance solutions, it could all come crashing down like a house of cards.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Financial Needs Hierarchy Pyramid<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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Do I need life coverage?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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The answer to this question differs depending on the family and dependents\u2019 situations. Let us analyze the possible scenarios.<\/span><\/p>