When it comes to securing your family's future and ensuring their financial well-being, life insurance is a crucial consideration. But why exactly do you need life insurance? In this article, we will go through various reasons why life insurance is not just a smart choice but an essential one. Life insurance and emergency funds are the cornerstones of any sound investment advice.
We will go into the benefits and guide you through the considerations of securing your family's future with this financial safety net. Moreover, we will also explain how APS Bank, your trusted financial partner, is well-equipped to support and guide you with this decision.
What is Life Insurance?
There are various types of life insurance policies. The main benefit of traditional life insurance is that it pays out a sum insured to the heirs in case the insured passes away.
Over the years, the market has developed, offering several products and options to choose from. While this variety is beneficial, it can make choosing the right type of coverage a more challenging task. Options may vary among companies, but the most common include:
- Adding savings benefits, which are paid regardless of whether the insured survives or not the term of the policy
- Choosing a definite maturity or whole-of-life cover;
- Incorporating critical illness or health benefits;
- Designating a beneficiary.
Why Do You Need Life Insurance?
Life insurance is a versatile financial tool with a multitude of benefits, making it an indispensable part of your overall financial planning. Let's explore why you need life insurance in greater detail.
Financial security
Life insurance is primarily designed to provide your loved ones with a robust financial safety net. When you are no longer there to provide for them, the death benefit from your life insurance policy steps in to replace your income. This will support your family to meet essential financial needs without disruption. Whether it is paying the home loan, covering daily household expenses, or securing your children's education fund, life insurance offers much-needed financial security during challenging times.
Long-term savings
Life insurance is not just about protection; it can also serve as a strategic long-term savings tool. Certain life insurance policies come with an investment component that allows you to build cash value over time. This can help you work towards various financial objectives, such as buying your dream house, funding your children's education, or preparing for a comfortable retirement. By investing in life insurance, you are not just securing your family's future; you are also working towards your own financial goals. Read more.
Legacy planning
Life insurance empowers you to leave a lasting legacy for your heirs or support a charitable cause that holds special meaning to you. It ensures that your hard-earned assets are distributed according to your wishes and there is cash available to pay for any tax on inheritance without having to liquidate family assets. By designating beneficiaries and specifying how you want the death benefit to be utilised, you keep control over the financial legacy you leave behind. This aspect of life insurance is instrumental in estate planning and can be an integral part of your overall financial strategy.
Peace of mind
Perhaps one of the most valuable aspects of life insurance is the peace of mind it brings. Knowing that your family will be protected and will not be burdened with debt in the unfortunate event of your demise is a source of comfort. Life insurance alleviates the financial worries that often accompany thoughts of the unexpected. Knowing that you have taken proactive steps to safeguard your family's well-being helps provide peace of mind.
Tax benefits
Life insurance policies can offer attractive tax advantages. In many cases, the death benefit paid to beneficiaries is typically not subject to income tax. Moreover, certain types of life insurance policies can provide tax-deferred growth on the cash value, allowing your money to grow faster over time.
Business continuity
Key person insurance is a type of life insurance policy that provides valuable protection for organisations by covering key individuals whose expertise, skills, or leadership are crucial to the organisation’s success. In the unfortunate event of a key person’s disability, critical illness or death, key person insurance helps mitigate financial risks. The policy payout can be used to cover recruitment costs, training or stabilising the organisation during a challenging transition period. Overall, key person insurance serves as a strategic risk management tool, offering organisations the financial support needed to navigate unexpected disruptions and maintain operational resilience.
How Much Life Insurance Do You Need?
After deciding whether investing in a life insurance is the right fit for you, choosing the right life insurance coverage is the next step. You will need to consider the immediate and regular income which would be required in case the insured passes away:
- Immediate obligations - calculate the sum required to meet immediate financial obligations. This could include final expenses like medical costs, funeral expenses, and estate-settlement costs, along with any lump-sum obligations such as outstanding debts, mortgage balances, and education expenses.
- Future household income - assess how much regular income would be needed to maintain your family’s lifestyle and cover ongoing expenses.
Determining the appropriate coverage depends on your unique situation and requirements. Still not sure? Our financial advisors can provide a detailed analysis based on your specific needs.
APS Bank's Life Insurance Plans
At APS Bank, we offer a choice of three life insurance plans, designed with the aim of securing your financial future:
Protection Plan
This plan pays out a pre-agreed sum in case the insured passes away. It can be set as level term or decreasing term and used as security against loans.
Regular Savings Plan
This plan allows you to securely and effectively accumulate your savings in the medium to long term. This plan offers capital protection (after the deduction of applicable charges) if held to maturity and provides flexibility in terms of investment amount and duration. Premiums start at just €40 per month, with options for various payment frequencies. You can also enhance your plan with periodic add-ons for bank loans, family protection, or business needs.
Single Premium Plan
In contrast to the Regular Savings plan, the Single Premium Plan requires a one-time premium payment and allows periodic add-ons to boost your savings. It also offers capital protection (after deduction of applicable charges) if held to maturity.
Get Started with APS Bank
To get started, explore our life insurance options and fill in the form below to get in touch. Your peace of mind and your family's financial well-being are well worth the investment.
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Approved and issued by APS Bank plc, APS Centre, Tower Street, B’Kara BKR 4012. APS Bank plc is regulated by the Malta Financial Services Authority as a Credit Institution under the Banking Act 1994 and to carry out Investment Services activities under the Investment Services Act 1994. The Bank is also registered as a Tied Insurance intermediary under the Insurance Distribution Act 2018. Terms and conditions apply and are available on request.
