Financial planning and insurance
By Mark Lambie
There are many things that are a key part of your financial plan. Budgeting is important. So is investing. Estate and tax planning are vital. One area you need to include is insurance. answers the question, "what if the unthinkable happens?" Unfortunately, too many people avoid the topic of because they fail to see the benefit.

The benefit is this: they will have peace of mind that their loved ones will be taken care of if they die. So why are you reading about on a site that has to do with loans? Simple. You may want to consider to cover your loans so that if you were to pass away, your loved ones will not be saddled with unexpected debt.

And, if you have a secured loan that your loved ones cannot cover, you do not want your assets seized to cover the loan. That will add tragedy to tragedy for your loved ones!

So how do you know what kind of to get to cover your loans? Or any expenses at all, for that matter? The easiest thing to do is to determine the length of time that a particular expense will be present in your life and get that matches the term of the expense.

For example, any death or estate tax will always be present in your life because no matter when you pass away, those expenses will be incurred. Also,

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if you want to bequeath a gift to a charitable organization, you will likely always want to have that as an available gift to make.

However, for many other expenses, including your loans, a temporary solution is better. For example the mortgage on your house or the loan on your car are both excellent loans to create for. This way, if you were to pass away while these expenses are still present, they will be automatically paid off at your death. And because you are matching the term of the loan to the term of the insurance, you are only buying for as long as you have the loan.

For example, say you have a secured home improvement loan to last for three years while you build an addition onto your home. At the same time you take out a three year term policy for the same amount as the loan.

If you were to pass away in the second year, the would pay your loved ones the full amount of the loan, of which they can use two thirds of it to pay the remaining portion that is still outstanding on your loan.

People do this for many kinds of loans, including their mortgage, their automobile loans, and any other kind of loan they have. It's an excellent way to ensure that your loved ones are not going to be saddled with debt if tragedy should strike.
Mark Lambie is the founder of www.loan-source.co.uk

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