Life insurance is a contract that is entered with an insurer that insures the life of a person for a certain period of time. It is important to protect the life of family members, especially children, and spouses after you die. Life insurance in Singapore is a company created under the direction of the Singapore Banking Association. Life insurance is an important part of financial planning. The benefit of life insurance is that it can give you rewards and bonuses in your retirement years to be able to support yourself and your family in case of your death. It has many benefits including;
1. Financial security for your family
This is the prime reason why people buy life insurance. It provides financial support to your family in case of your death. Life insurance in Singapore will help your family meet funeral costs, mortgage payments and also educational expenses for your kids. It will also help them make investments for their future and lastly help them maintain a standard of living that is similar to yours before you died (or in some cases, even better).
2. Help you manage debt
In case you have unpaid loans or credit card debts, life insurance can be used to cover these debts after you die. Life insurance can also pay these debts off once they are reduced to a specified amount by the insurers. This way, you won’t be saddled with debts after you die.
3. Help pay for funeral or burial costs
Life insurance can also cover the expenses that you will incur after your death, such as a funeral or burial. This way, you won’t have to spend your life savings on these costs. For example, it can pay your medical bills if they are considered excessive in comparison to the amount that the insurance covers. You can even put aside money for future funerals by just starting a savings account and adding to it once it’s covered by your life insurance policies.
4. Help cover property taxes
Life insurance can also provide financial security for your family on their property, if they have paid their property tax and are still in debt to the government. The government generally requires that you register the value of all your assets before you die before it will release the death certificate to your spouse or family members. This is to prevent people from leaving their assets to a relative or friend instead of their spouse or family member. If you don’t register all your assets, only the value of your estate will be released as a death certificate.
5. A Retirement Plan
In Singapore, when you retire, National Provident Fund (NPF) will take care of any debts that you might have incurred during your working years. But if you don’t have any life insurance policies, the Central Provident Fund (CPF) will not be able to help your family members in case of your death. Life insurance in Singapore provides a huge amount of money for your family as a retirement plan, which can reduce the burden on their CPF accounts when they retire.
6. Investment Management
Life insurance is also used by people who are looking for long-term savings and investments. You can buy a life insurance policy that qualifies as an investment unit or an approved deposit scheme (ADS).
Why You Should Have Life Insurance—No Matter Your Age