Many people ignore insurance. They don’t know the different benefits they can get from buying life insurance. They feel like they are losing money if they spend money on insurance. In the world of personal finance, insurance plays an important role.
In personal finance, we usually talk about saving money, budgeting money, and even how we should be spending our money wisely. These are just the basics to talk about when it comes to personal finance. We should also talk about emergency funds and insurance.
Emergency funds will not be discussed in this article. I believe you will prepare your emergency funds before you invest your money. I will give you some reasons why insurance is very important, especially life insurance. Are you ready?
Investing is very exciting and rewarding. But don’t immediately dive into investing unless you have emergency funds and, most importantly, health and life insurance.
Life insurance is very important as it serves as income protection for the whole family who are financially dependent on the breadwinner of the family. If the breadwinner is secure and he dies, the family will not suffer financially since they may have money to use to survive.
In the world of insurance, the money that family members or beneficiaries are called “benefits”. The insurance company will pay an exact amount to the beneficiaries of the insured person.
Most of the time, the beneficiaries are the people who are financially dependent on the insured. Therefore, if there are people who are relying on you financially, you should also immediately take out a life insurance policy.
Okay, enough about the benefits. Know the reasons why you should purchase life insurance before investing any money.
Your investment funds are not enough to financially help your loved ones. The ideal coverage or face amount that your beneficiaries should receive upon your death is equivalent to 3 to 5 years of annual income.
For example, if your annual income is one hundred thousand dollars ($ 100,000), your beneficiaries should have half a million dollars when you die.
If you’ve just started investing and your funds are $ 75,000, your family will be in financial trouble if you die.
One of the important things to consider before investing any money is life insurance. Don’t ignore it. Don’t be in a hurry. Plan your investment plan carefully, and one of your investment plans is to protect your income first. Hope you learned something today. If you have any questions or want to learn more about investing, you can read blogs, ask questions on forums, or attend investing seminars.