In this two-part series, we shall be tackling the reasons why you should get your life insured and how it could secure yours and your family’s financial future.
When you are a working parent with children dependent on your income or still single but the family’s breadwinner, you can’t afford to die. Well, unless your life is insured. In your absence, the income that your family is totally dependent on will stop and that’s when your life insurance proceeds kicks in. For example, if your dependent’s expenses is about 20000 pesos a month, a 2 Million life coverage will provide for them for over 8 years after you’re gone! That should give them enough time to emotionally recover from your demise but shouldn’t have to worry about the financial setbacks of you going away.
Mortgage Redemption Insurance
Most banks require you to purchase MRI or Mortgage Redemption Insurance equivalent to the loaned amount before they release the loan proceeds. This is for the bank’s and your beneficiaries’ protection in the event of your demise. The insurance proceeds will pay out the remaining payable loan and will enable your beneficiaries to transfer the house/condominium in their name without the burden of taking over the loan payments.
All the properties and other assets, including cash deposits, you’ve accumulated throughout your lifetime don’t just get transferred under your family’s name after you die. They have to pay the government estate taxes equivalent to up to 20% of the total estate that you left behind. You beneficiaries may be able to immediately claim your insurance proceeds and use them to pay for the estate taxes. In the absence of life insurance, your family must shell out the estate taxes on their own and may be forced to sell assets at a discount just to raise the required tax payment.