The importance of insurance keeps increasing every day because of our lifestyle. Now that we tend to work more with loans and debts as adults we must know that things like accidental death or being fired from a job at a very bad time in your life can happen and do happen to many people around the world every day.
The worst part is that when these things happen to us, we usually have little to no financial protection against them and we are forced to sell our homes or work multiple jobs just to keep up with the payments of our mortgages.
Why insurance is of the utmost importance?
1. It might help you when you lose your job
Scott and Trish were husband and wife living on Scott’s $150,000 a year salary, and his employer gave him insurance worth two years of his salary and they thought it was enough. However, based on the advice of a friend they decided to buy a $750,000 life insurance that had a 25-year term to feel safe if Scott loses his job.
2. Your kids might have to carry the burden
Kelly was a single mom living almost paycheck to paycheck, and after a while, she decided to buy a house without thinking of insurance. After a couple of years, she died in a car accident, and her children had to deal with her unpaid mortgage, just because she didn’t buy insurance.
3. Businesses can be saved in case of the death of a key employee
Michael started a retail business when he was very young. The business grew over the years into a multi-billion industry which offered high-level customer service. Michael was personally responsible for most of the major innovations in the company.
The board of directors realized how crucial Michael was for the company. They believed that obtaining a key employee insurance policy would be in the best interest of the company. A key employee life insurance policy is obtained to shield businesses from financial losses in the case of death of an irreplaceable employee. Although Michael believed that he was healthy and would live to old age, he died of a heart attack several years after the company had obtained the policy. Soon after, sales and stock prices decreased rapidly. It was the life insurance payment that allowed the company to survive throughout the next year and bought enough time for the new CEO to rebuild investor trust and get the sales back on track.
4. Business Efficiency is Increased with Insurance
When the owner of a business is free from the botheration of losses, he will certainly devote much time to the business. The carefree owner can work better for the maximization of the profit.
The new, as well as old businessmen, are guaranteed payment of a certain amount with the insurance policies at the death of the person; at the damage, destruction or disappearance of the property or goods.
The uncertainty of loss may affect the mind of the businessmen adversely. The insurance, removing the uncertainty, stimulates the businessmen to work hard.
5. Enhancement of Credit
The business can obtain a loan by pledging the policy as collateral for the loan. The insured persons are getting more loans due to the certainty of payment at their deaths.
The amount of loan that can be obtained with such pledging of policy, with interest, thereon will not exceed the cash value of the policy.
6. Business Continuation
In any business particularly partnership business may discontinue at the death of any partner although the surviving partners can restart the business, in both the cases the business and die partners will suffer economically.