As a young working professional, there are many financial steps you need to take to ensure that you have a bright future, as well as a stable one. These steps include buying a car, renting an apartment and putting money aside for savings. Another important step you need to consider includes credit life insurance.
It is an insurance policy that covers the principal member’s debt in the event of their death or disability. Now, you might be thinking, ‘I am way too young to be worrying about that right now,’ but credit life insurance or even retrenchment insurance is a vital financial step to take as a young professional. Outlined below are just some of the reasons why you need to consider credit life insurance.
It’s not just about you, it’s about your loved ones too
When you pass away or unexpectedly become disabled, credit life insurance is in place to repay your debts when you no longer can. This allows your family to lay you to rest or to continue with their daily lives without having to worry about repaying debts that they cannot afford to.
Ask yourself this: if you passed away today, could your parents or other family members afford to pay for your student loans or credit card bills? It is unlikely that this is the case without having to take on significant financial strain, which is where credit life insurance will be immensely helpful. Your family needs to be able to grieve the situation, and financial strain will cause undue stress.
Younger equals cheaper
When a life insurance company looks into an applicant, one of the first things that they look at is the age of the applicant. They also focus on how likely an applicant is to make a claim in the future because ultimately the risk to the company is the death of the applicant.
Your credit life insurance company wants you to live for as long as possible, which means that the younger you are the lower premiums you will pay. These lower premiums are highly affordable, so you will be able to take out credit life insurance even on a lower salary. If you apply while you are still young, you will pay less at the start of your policy, allowing you to save more money as the years progress.
Healthier equals cheaper
As a young working professional, you most likely go to the gym and eat as healthily as possible. This is a huge positive to have when applying for credit life insurance, as the healthier you are the less likely you are to make a claim early on, which means lower premiums.
Factors like income, smoking status, age and profession assists in determining the premium of your credit life insurance and depending on your health status, your premiums could increase, decrease or certain benefits could be excluded. If you are young and healthy, applying now for credit life insurance or retrenchment insurance will end up saving you money and you will have a good amount of money built-up for the pay-out.
The benefits are not charged as extras
With life insurance, the principal member has to apply for, be underwritten and pay for each individual benefit that they want whereas with credit life insurance all of the benefits are included in one package and you are not charged extra.
This makes it an affordable option, especially when you are just starting out in your career and have already racked up some debts in the form of student loans or car loans. The benefits are included in your package, but be sure to ascertain whether or not any will be excluded based on your credit history, health or profession as this could change the initial package that you signed up for. Speak to a financial advisor about how to progress if any benefits are excluded based on these grounds.
It will allow your family to grieve stress-free
Nobody enjoys thinking about how their families will react to their passing, but having credit life insurance will give you the peace of mind that when you do pass, your family will not have to worry about repaying debts while they are grieving.
It will also ease the stress of becoming disabled, especially if you are the sole breadwinner in the house. Your debts will be paid off and your family can go about life as normally as possible. This is one of the major reasons why you should invest in credit life insurance, despite being young, fit and healthy. Nobody can know what is waiting around the corner so it is vital to ensure that you are covered for every eventuality.
It is an investment in your future
Having debt hanging over your head can make life difficult, and if the worst should happen like you passing away or becoming disabled, having that debt fall onto the shoulders of your family can make life unbearable. The younger and healthier you are, the lower your premiums could be and a major advantage is that benefits are not charged as extras. It might not seem like the most exciting investment to many young professionals, but it is a vital step to take for your future.