12 June, 2020

Why Get Life Insurance If You are Financially Independent?

Life insurance is known as a form of protection from any financial loss. When something unexpected happens, insurance policies can help you to keep finances afloat. By paying a monthly fee, you can ensure that after you pass away the ones who depend on you and your income will have a stable situation – at least when it comes to finances.

How? The insurance will cover costs like educational expenses, mortgages, final expenses, or funeral services. Knowing that the life of your loved ones will not change as drastically as it could may give you peace of mind.

It does not make any difference if you are unemployed, owner of a charity or business, or an employee – you can always have life insurance.

There are two types of life insurance policies. Term life insurance provides full coverage of benefits during a specific period of time – usually between two and thirty years. It is less expensive, but it may be connected with a need for a medical examination. Permanent life insurance, as the name implies, covers you during your whole life. As you pay a monthly fee, you build up cash value over time.

Life insurance issues are connected with lots of decisions and processes. Your ability to be accepted for a policy depends on factors such as your income, social status, or health history.

If you are thinking about buying insurance, you should be aware of how and where you will source your provider.

There are lots of websites that offer insurance policies, but unfortunately, not all of them are reputable. That’s why you should always do research.

If you want to be sure that you choose a trustworthy and professional insurance provider, visit anorak.life. Thanks to this website, you can be guided through the whole process of getting insured and their advisers will help you to adapt your policy to meet your specific needs.

You might wonder if you need life insurance if you are financially independent.  You might not want to take on more expenditure as, after all, you are in full control of your money.

Once your income can cover all your expenses comfortably, life insurance may seem unnecessary. Even though you might have built up a nest egg to cover all eventualities, here are some factors that may make you think again.

First of all, Inheritance Tax – even though only a small percentage of estates located in the UK will have to pay inheritance tax charges, it is something worth considering. Inheritance Tax is paid on any estate whose total worth is higher than £325,000 – any amount of money over this figure will be taxed at 40% and the income tax bracket of the beneficiary plays no role in this. If you write your life insurance policy in trust, then the money paid out in case of your death will not be included in your estate, which means that the chances of your beneficiaries paying inheritance tax are much lower.

If, however, your estate still exceeds the £325,000 mentioned, a life insurance policy may help your beneficiaries pay the tax liability.

Thanks to life insurance, you do not have to worry about what will happen after your death. Whilst the division of assets such as real estate, art, or collectables is more likely to be tied up in Probate, it is much easier and faster to diversify your bequests by life insurance.

Life insurance will also give you peace of mind. Whilst you will have to budget for another monthly premium, you also guarantee yourself and your family security. You do not have to worry about what your life will look like in case something unpleasant happens.

Life can be very unpredictable. Although, one day, everything may seem perfect, the next day may bring a completely different reality. A car accident or terminal illness can irreversibly change your whole way of life.

A severe accident could not only take away the person they love but also the family’s income if you were their main provider. Not only will they have to mourn after a loss of a close person, but also think about how they were going to survive. Not a situation anyone wants to find themselves in.

Even if you have more than enough assets to cover your basic needs and some luxuries on top of that,  life insurance is still important. People who have a high net worth often forget about the fact that it all can change in a matter of days.

Of course, life insurance is not mandatory. However, that doesn’t change the fact that it is still worth having. Why? As it was said before, life insurance will pay some part of estate taxes. These policies, which can be, of course, adjusted to your needs, may help your family to maintain the same standard of living, no matter what happens.

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