Life Insurance As a Key Component of a Financial Plan


Author: Robert McMillen

In this world full of insecurities, every individual, household, and company prefers to be on the safe side and guarantee themselves with insurance. Life insurance has become not only fundamental but also a compulsory part of our life as different questions pop up in our minds like: “Are we ready to recompense all the expenses of life accidents?”, “Do we have enough money to cover the unpredictable tremendous costs?”, “What about my family’s safety and my employees’ security?”… All these concerning questions have resulted in the establishment of insurance companies taking care of the incurred cost of accidents or other guarantees in life as they have safeguarded the massive financial planning that insures the life of its customers by securing the coverage of the expenses from outstanding debts, student loans, less bureaucratic burdens of inheritance, safe emergency funds, and many others. The insurance won’t be successful without proper financial planning consideration.

Importance of life insurance planning

Life insurance is indeed an easy relief for the beneficiary and his beloved ones as it is an adequately convenient service package in times of need. The perks of insurance are appreciated over time despite the fact that many people are incapable of profiting or others undermine the importance of it as a sound financial plan.

This proactively undertaken life insurance is about establishing firm saving protection for college or emergencies, securing your income from disabilities or accidents as well as generating swift inheritance of properties among family members in the event of death or disabilities, and finally living in comfort after retirement. Indeed, it is a savior from an overloading burden during hardship where the death of a loved one is already a dismal and stressful calamity psychologically, mentally and physically as well as financially like the medical bills, funerals, and many others. Besides the unpleasant moments of life, there are some other phases that require the individual to be ready financially like covering the costs of children’s education, elder family cares, losing properties during disasters, job losses, retirement securities, and emergency funds depending on the type of insurance package the recipient can benefit from. After all, economically speaking, it is a safe approach to invest in yourself and your family as a nest egg saving and simultaneously profit from the advantage of getting tax payment exemption in some countries like in the USA.

How to fit life insurance into your financial plan?

Life insurance package products or services are so diverse and customizable that they have all the conveniences created for potential customers. The variants have different riders or benefits that the customers guarantee themselves with and based on the demand, the prices of the premiums are set. Speaking of Finance, as a long term financial planning, life insurance has several components that the beneficiary can profit from with the applicable perks, to name a few:

The choice of insurance variant will be the one that suits the needs and the financial goals. Based on the conveniences and necessities as well as different factors like utilities, condition of work, family financial situation and planning, number of dependent and independent family members, rules and regulations of the residing country. The best step that anyone can take is contacting an attorney who will assist in determining and narrowing down into the best premium and riders that align with the users’ needs and necessities through the proper financial management and planning of funds.

Who needs life insurance the most? How to choose the right type of life insurance?

When considering taking an insurance premium, the individual is thoughtful about the importance of it in their life. Based on the evaluation and examination of experts in the field, there is a range of people in need of insurance who are categorized as potential customers and will profit the most from those insurance package premiums:

  • Families with several young children or with special needs dependents.
  • A spouse’s income as the sole revenue to the dependent household.
  • Retired or elder family members without savings.
  • Adults with outstanding debts or joint mortgages
  • Business initiators, owners, or partners as well as employees.

Generally, there are 2 major categories of life insurance policies available. These are “whole life insurance” and “term life insurance”. To open up the brackets of each category, the whole life insurance safeguards the beneficiary throughout the whole life like the disability insurance as a striking example. In addition, it is a source of protection to the parents and the other dependent consumers where the price of the premiums escalates gradually with the aging of the beneficiary. This insurance type also covers multiple goals while building an accumulated cash as an investment whose value doesn’t decline and can be used as collateral for a loan upon request. On the other hand, term life insurance is comparatively cost-effective as the beneficiary gets the largest amount of the coverage for a span of time with 5, 10, 15, and maximum 30 years. This coverage can be added up with riders into the premium under the name of “Convertible” term policy and it is recommended to be purchased at a younger and healthier state where the benefits are way higher than the low costs of purchases incurred. In addition, this premium can be enabled upon need for the future coverages like children’s future university tuition insurance and can be provided for groups like full family packages or for employees.

Overall permanent whole life insurance is relatively more expensive than temporary term insurance as it remains perpetually with the beneficiary. Yet each type of insurance has its own peculiarities and subsets of offerings where all of them require a physical examination prior to the purchase of the premiums to report the health state of the beneficiary.

Experts to talk before getting life insurance

Not all rough estimations meet the right ending, we always seek consultation or assistance from experts. The same concept is pursued in financial planning for insurance where those potential beneficiaries reach out to a consultant who will advise them to the proper premiums and insurance companies for a sound estate plan. There are mainly 3 types of consultants to be contacted with:

1) Financial planner or advisor

2) An account or a tax professionalist

3) An estate attorney


In conclusion, the valuable essence of the insurance is not solely an absolute necessity to mitigate the risks and protect the coverage of the beneficiary and his or her dependents, but also the flexibility that creates for an individual to profit from the diversity of the premium riders as well as builds a cash flow investment in some cases. Furthermore, guardianship and consultation with the proper attorneys or advisors in the decision-making process will determine the optimal choice for the beneficiary in their financial planning.

Robert McMillen is an entrepreneur, finance professional, consultant, and passionate writer. For many years using his industry knowledge and experience he has helped his clients to create more wealth and reduce costs.