Importance Of Life Insurance

As a result of today’s economic climate and the recent financial market turmoil it has been highlighted that there is a need for people to start to seriously consider their financial risks. What would happen to those families, where the person that was providing the main source of income was to die before they had expected? Recently in Ireland debt levels are at an all time high and the idea of finding and maintaining a job is becoming increasingly harder and harder. As a result of this life insurance is becoming more of a need. We all have insurance in one form or another, be it auto insurance, mortgage protection, medical, liability, disability or life. It is our way of controlling our risks. In order to examine the necessity for life insurance we need to examine the risks that life insurance covers and how well these risks are covered. To do this we need to examine the different forms of life insurance.

Let us start by examining term life insurance. Term life insurance provides financial protection for a specific period of time e.g ten or twenty years. Premiums are normally level and guaranteed for that time. Term life insurance is normally less costly thank permanent life insurance. At the end of the period of cover some policies have a conversion option which allow the coverage to be continued (some do not require medical underwriting) but at a much higher premium. Such insurance provides a safety net for your beneficiaries/dependents in the event of your death. It ensures the family’s financial needs are met e.g. paying off the mortgage, funeral costs, college fees, keeping a business going and so on. In the event of your death this benefit becomes a need not a luxury. Term insurance is intended to cover lost income but it...

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