Risk and Insurance Management
Death can be a source of loss in two ways. The first one is direct loss, which arises to foot the funeral costs, liquidation of debts of the deceased and the estate transfers costs like probate etc. The Second one is the loss of income.
On first consideration, it might seem that risk of income loss resulting from premature death is universal. However, this theory does not automatically get translated into financial loss. The individual who die doesn't suffer financial loss: the financial loss is suffered by those who are depending on the income of deceased.
Life insurance is designed mainly to protect the beneficiaries' standard of living in the event of the untimely death of wage earner. Through life insurance, the beneficiaries will have the financial resources to protect their future income and pay for immediate and future financial obligations. We need life insurance if our financial obligations at the time of death exceed our financial assets.
In our circle of life, at Prudent we cover your life as well as non-life space. While we consider, here are covers that should find a place in your portfolio in any year.
- Emergency Fund Planning
- Life Insurance Need Analysis
- Health and Disability Insurance
- Home and Travel Insurance
In such cases, the insurance proceeds would help your spouse or partner manage financially in the event of death. The downside to not buying life insurance would be that the individual's family might have to suffer a financial setback and may have to sacrifice some life goals without the regular income of the breadwinner to support them.