Having a Will or Life Insurance Policy? Which One Do You Need?

Introduction

The thought of writing a will or getting life insurance is something usually avoided as many falsely believe it implies that death is near. However, contrary to popular beliefs, both financial tools are instruments of love - you need to have them in place if you care enough for your loved ones and dependents.

It is equally crucial to know the difference between the two terms so you can decide which will benefit you and your family in the long run. So, which is better? Will or Life Insurance? This article discusses both concepts in more detail.

Life Insurance Policy

Life insurance offers the insured complete peace of mind, knowing that their loved ones are financially safe and protected years after death. It’s a signed contract saying that the insurer chooses to pay a benefit or amount to a beneficiary in the instance of the insured’s death. This beneficiary could be their spouse or child(ren) or any other person.

Advantages of Life Insurance Policy

1. Life Insurance Helps With Burial Expenses

One of the different benefits of life insurance is that it could help cover the deceased funeral expenses among other funeral arrangements. The cost of planning a funeral isn’t a walk in the park. It can take a plunge on the family’s account and get so expensive that the family is still paying for it months after the funeral. With a life insurance policy, the insured can be assured that their family is not reeling in debt months after the burial.

2. Life Insurance Policy Covers Terminal and Chronic Illnesses

Although this doesn’t apply to all situations, a life insurance policy depending on the one you choose can cover chronic illnesses. The insured can enjoy their death benefit while they are still alive to pay for medical care and other hospital expenses.

3. Tax-Free

Generally, most benefits are tax-free, so whatever amount in death benefit the beneficiary receives does not include tax. The beneficiary also doesn’t have to be included in their tax reports.

Will

Will, on the other hand, is a legal document that lists how you wish your properties and assets to be divided when you pass on. The properties could go to the deceased family, friends, or even someone completely out of the family circle i.e a charity or an organization.

The decision is all up to the deceased. A will could also include who will care for and cater for their dependents.

Advantages of Having A Will

While there are several benefits of a life insurance policy, having a will also comes with its own advantages. Here are some of them:

1. Property Distribution

A Will ensures that your properties and assets are evenly distributed according to your wishes. So the individuals will know what share or the amount they deserve. It also helps to give directives on how their businesses and estate should be managed upon their death.

2. Child Protection

A will provides a subtle protection law for the child(ren) or dependent of the deceased. The children are protected from the wrong people and are in the safety of the rightly appointed caregivers or guardians.

3. Hastens Final

ArrangementsBurial and final rite plans can be time-consuming but a will shortens the long process with just the help of a lawyer or legal counsellor. The deceased last wishes will be spelt out in the presence of the family.

4. Reduces Family/Beneficiary Disputes

Having a will in place makes it much easier and quicker for your family, relatives, or friends to sort everything out after the person’s death. Sorting a family right without a Will can be a tedious process, and can cause more disputes that might eventually lead to a court case because of the lack of direction. Having a will takes the stress and dispute away.

What Is A Will Beneficiary?

A beneficiary of a will is the person selected to inherit something when someone else dies. Details of their inheritance can be found within the Will document.

Will Beneficiary is an individual chosen or named in a legal document to inherit money, estate and or other property. A beneficiary can be multiple people. The properties could be divided by percentages or any way the insured chooses.

What Is The Difference Between Life Insurance And Will?

A life insurance policy provides help financially to whoever the insured appoints on the policy in the case of an unfortunate incident. A will is a legal document that lists how a person wishes to distribute their property after their death.

Do I Need A Will For My Life Insurance?

Yes, you need a will. A Will is like a guiding light with instruction on who deserves what and how exactly and evenly your estate will be distributed.

Does a Will Override Life Insurance Beneficiaries?

No, it does not, as long as the insured named one or two persons as beneficiaries. Having a will does not disrupt the insurance beneficiary.

Bottom Line

Life insurance policy and Will are both important. One pays a bulk sum to a beneficiary while the other shares assets, properties and anything else listed in the legal document.

Also, note that if a life insurance beneficiary is different from the beneficiary named in the will then the insurance sum goes to the insurance beneficiary while whoever is listed in the Will is entitled to the properties on the Will alone.

Thinking of buying life insurance? Leadway Assurance offers a pre-priced and affordable life insurance plan that costs only N10,000 yearly with up to N1,000,000 in benefits. Looking for something else? Kindly request a callback today.

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Source: Legit.ng