Preserving Your Savings With Insurance

 No matter what stage of your financial life you're currently in, saving money isn't always easy. An effective savings plan involves more than just a budget and goals; it involves a disciplined attitude toward keeping your finances on track, working toward reaching goals, and avoiding impulse buys when your savings start to accumulate. One of the things that you'll most want to do when you start saving money is protect your accumulating cash from the unexpected. Insurance not only protects your savings but helps preserve it for its intended use.

 

Protecting Investments

 

Every time you spend money, you're making an investment. Whether you buy a house, a car or another big-ticket item, instead of putting money into your savings account, you're spending it on an item that you expect to get a return out of. You're expect a return either though the appreciation of the asset value or from the actual usage of the item and its ability to enhance your quality of life.

 

When one of these items becomes damaged during an insurable incident and you don't have insurance, you must take money out of your savings in order to replace it. Not only does this reduce your savings but it also reduces any asset appreciation that you might have gotten from the item as you effectively double your cost basis. With proper insurance, you can ensure that you don't have to pay to replace your property when it becomes damaged due to a covered peril. Instead you can rely on your insurance company to pay replacement or actual value for the item.

 

Creating a Legacy

 

At least a portion of your savings is probably intended to go on far beyond your own life to create a legacy for your heirs. They may use this legacy to start their own families, to go to college or to pay off the taxes that your estate prompts. Saving money to create a legacy is not easy for many reasons, such as:

 

  • Within the confines of your current and future salary, it may be extremely difficult to find enough money set aside to leave the kind of legacy you want your heirs to have.
  •  
  • Your desire to create a legacy could impact your ability to live a comfortable retirement as you may attempt to spend less during retirement in order to ensure that there is something left behind for your heirs.

 

A life insurance policy is the perfect legacy planning tool as it creates a set of funds exclusively for legacy planning. This creates a more affordable way to leave the legacy you want while still allowing you to save money for all your other savings goals.


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