Insurance is necessary to protect yourself from the “financial tragedy” and need insurance. Only time can heal an emotional tragedy. And nothing will solve financial problems better than insurance policy (we will talk about the alternatives in one of the following articles in more details).
And when the breadwinner insures his life, he is doing it not for himself but for his family, in order to take care of it when he is gone. I am certainly talking about classic life insurance, i.e. you die unexpectedly, and your family gets money. In addition to life insurance, insurance companies also offer to insure health. In this case, the insurance policy payout will help you and your family pay for treatment and provide adequate care. Sometimes it can even cost life; this refers to an expensive operation when there is no money for it.
First of all, life insurance is necessary for people who have a family, children or other people who depend on it. I am talking about the breadwinner of the family.
Along with the original goal of providing a financial cushion for loved ones in case something happens to you, life insurance has the following options:
- save up for planned expenditures, for example, higher education for children;
- save up for raise to pension.
A combination of insurance and savings: there is a fixed income in classic endowment insurance. However, the possible income will also be lower than in investment insurance.
Once you have entered into a contract, you can have both or one of two options:
The insurance event has occurred: your beneficiaries (those whom you indicate in the contract) will receive a payout (death risk);
Nothing happened to you until the end of the contract: you get your savings (longevity or surviving risk).
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