During a financial crisis like a recession, many middle-class families struggle to meet their everyday needs because they face a loss of primary income. In such a situation, having a secondary income source is pivotal. Most financial experts recommend choosing life insurance as that secondary income. However, many people become sceptical about buying life insurance because they believe the premium for the insurance is expensive and unaffordable.
Their perspective of life insurance being expensive makes them oblivious to its various benefits. The truth is life insurance is not costly, and many policies in the market are pretty affordable for all. It is a basic necessity to secure your family against future uncertainties.
So, let us look at the importance of a life insurance policy during a recession.
Secures your family’s financial future
In the event of your unfortunate demise, a life insurance policy will give your family financial security. The insurer will pay the death benefits, i.e., the sum assured to the nominee. Your family can use the amount to meet their everyday expenses and feel financially settled for a few years until the dependent members can stand on their own feet.
Flexible premium payment terms
During a recession, you may face a pay cut, or you may not get the regular income you would get otherwise. In such a situation, if you are wondering how, to manage recurring payments like paying a life insurance premium, then you would be happy to know that most insurers give you the flexibility to choose the premium payment terms.
If you are not able to pay the monthly or quarterly premium, you can negotiate with the insurer to revise the premium payment terms and choose an annual premium payment term. In that case, you will get enough time to accumulate sufficient funds to pay the premium and keep the policy active.
Also, most insurance companies have a specific grace period. This means that even if you cannot pay the premium on time on or before the due date, you can still pay the amount later during the grace period. The grace period varies from one insurer to another but usually ranges from 60 to 120 days.
During a recession, you may face some cash crunch. In such a situation, if you have a life insurance policy, you can avail of a loan against the sum assured to meet your short-term expenses. You can use the money for mortgage or rent payments, childcare or education fees, medical bills etc.
Once your financial condition improves and you get back on your feet financially, you can slowly repay the loan.
Thus, life insurance helps you have financial stability when life throws a curve ball. Remember, the primary purpose of buying life insurance is to secure your loved ones; it will help them in good and bad times. If you have not purchased life insurance yet, don’t delay it further, and buy a policy with a high sum assured now!