If there are two topics within the financial world that many struggle to fully understand, they are Insurance and Debt. What’s even more difficult for many to understand is how exactly they relate to one another. Can insurance keep you out of debt, and how do you go about finding the best life insurance types and rates for your specific situation?
Many people are so confused by the entire process of insurance and how it can affect debt that they simply never address it. This is obviously not the best answer, spending a little time to truly understand your debt as well as the scope of your insurance coverage can save you or your loved ones a lot of future headaches.
How insurance can affect debt
Though it’s an unpleasant topic, planning for the injury of death of a spouse is a responsible and necessary thing to do. Without a death benefit from a term life insurance policy you’ll be left paying for their funeral expenses out of pocket but and will also be responsible for all shared debit. This is a situation in which no one wants to find themselves, particularly during an already stressful time such as the death or disability of a spouse.
Let’s take some time to define exactly what term life insurance is, and what it can do for us.
“Term life insurance” refers to a policy with a fixed payment rate for an agreed-upon “term,” or period of time. During that time, the payments you’re responsible for will neither increase nor decrease. It is essentially a guarantee that locks you, as a customer, into a commonly low payment for an extended period of time – the term.
Term life insurance is frequently chosen over permanent life insurance because it is usually much less expensive, depending upon the conditions of the policy. Variations of the term life policy can allow for renewals under the same terms if certain conditions are met, or allow for similarly beneficial renegotiations.
So far so good, right? But what does this actually mean for you?
Benefits of term life insurance
Many types of life insurance are expensive, which leads a lot of people to assume no decent policy is affordable for them. Term life insurance changes that by locking you into a rate you’re able to meet for the length of the “term,” after which you may be in a better financial situation and may then have greater options. For example, those who have retirement benefits coming their way eventually may wish to take out a term life insurance policy in the meantime, since by the time it expires their family will be provided for other ways.
Term life insurance policies are very affordable and something anyone with debt is wise to consider. With a little research and some shopping around online, you’ll easily be able to find a customized policy that can help keep your family out of debt in the event of unexpected death.
Insurance ties directly into managing your debt by keeping your assets and your loved ones protected. Life is truly unpredictable, and knowing that you have taken the necessary steps to make sure your family is looked after can be a very comforting thought.
It’s not as confusing as it may first appear and there are certainly many resources at your disposal to help navigate the way. It is well worth your time – and peace of mind – to understand and consider term life insurance.
Protecting what is yours is not mandatory, but if you can, why wouldn’t you want to?
Article by Philip J Reed on behalf of Intelliquote.