Life Insurance is a “love product” If there are people whom you care about and will be affected financially if you die prematurely then it makes sense to recognize that as a potential risk.

Then how do you handle that risk? Your options are:

1. Ignore the risk and hope that it doesn’t happen or if the worst does happen then ‘they” can look after themselves.

 

2. Manage the Risk. Make sure you live for longer, diet exercise and stay home so there won’t be any nasty accidents on the road or at work plus you can save your money so that there is a big bag of money available to your loved ones if you do “check out” as it were. The only problem with that strategy is it could take a long time depending on the size of the bag of money required. For instance typically people want to cover the cost of the funeral say $10,000. Repay mortgage say $300,000 and replace lost income for a period of time. Even a minimal income for a minimal time may be $30,000 per annum for just 5 years or $150,000. A total of $460,000 needed in the bag. If you saved $500 per month it would take 920 months or 76 years.

 

3. Offset that risk to an insurance company and pay cents on the dollar. FoxPlan can complete a Needs Analysis with you to determine what is appropriate for you and your loved ones.

At its most basic, life insurance is designed to pay out a sum of money after you die to ensure your loved ones at least have some peace of mind from a financial perspective.

This ensures that your dependents are able to keep up with bill payments, maintain their standard of living and pay for funeral costs after you’ve gone.

 

One of the most common types of cover for this is a policy that pays out if you die within a fixed period of time. This is known as term life insurance.

 

If you die after this pre-agreed time-frame (called a term), you will not receive a pay out. For this reason, term life policies tend to have lower premiums than those that cover you for the whole of your life.