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Life insurance is a safety net. It is designed to provide financial support for your dependents or simply to give...
Life insurance is a safety net. It is designed to provide financial support for your dependents or simply to give your loved ones a little extra money, when you pass away. There are multiple types of life insurance policy to choose from, depending on all kinds of factors, like how long you want the policy to last, how much you can afford to pay into the policy while you’re alive, and how much you want the policy to pay out – the sum assured.
But before you decide on which type of policy suits your circumstances, you first need to decide: is life insurance necessary for you?
Here are some of the reasons why you should take out a life insurance policy according to lifeinsuranceguideline.com:
You Have a Mortgage
Many lenders will actually make it a condition of your mortgage offer that you take out a life insurance policy. This is because they want to be certain that they will get their money back if you die. Rather than risk such a gigantic debt being passed on to your loved ones, why not get a life insurance policy to cover the cost of your mortgage.
Those who have death-in-service cover may think that they don’t need life insurance because of the current policy. This is a type of cover which means your employer will pay out a tax-free sum if you die while employed at the firm. However, the pay-out for this type of cover is normally much lower than the recommended life insurance cover, and it normally can’t be linked to a mortgage.
You Have Children
One of the most common reasons for taking out life insurance is to provide financial security for children. There are a variety of different types of policy to cover kids, depending on what you’d like to pay for. If your children are you, you may wish to opt for a policy that will provide monthly payments to your partner, similar to a salary, to supplement their income. Alternatively, you can set up lump sums to be released when your child reaches certain ages, for expensive life events like buying a car and going to university. Bear in mind when choosing life insurance cover that some policies won’t provide payments to a child until they turn 18, so it may be worth naming someone else as a beneficiary in their stead.
You’re The Breadwinner
You may think that you don’t need life insurance because you don’t have children and don’t have a mortgage. However, that doesn’t mean that others aren’t financially dependent on your earnings. This will be particularly true if your partner isn’t earning any money – maybe they decided to go back to university, or perhaps they’re ill and need some time to recover. In circumstances like these, a life insurance policy will give you the peace of mind that your partner can continue on their current path, with the peace of mind that you will continue to take care of the finances even if you’re not around.
It may be that your partner does indeed have a job, but the pay isn’t enough to cover the costs of your rent and all associated bills alone. If this is the case, taking out a life insurance policy with a cash sum pay-out may be a great way to help them settle all current debts while they take the time to find a most affordable place to live.
Your Current Cover Isn’t Enough
Perhaps you already have a form of life insurance from your employer or you have a joint policy with your partner. However, if your circumstances change, this will impact your life insurance. It may be that you have another child, or you move to a larger house and need to take out a bigger mortgage. Circumstances like these will affect the amount of money you want to be paid out if you die. But, if your insurance provider charges a premium for changes to your circumstance, it may actually be quite expensive to amend your cover. If this is the case, you can get a top-up life insurance policy, which will sit alongside your original policy and cover all of the extra financial obligations needed.
You Don’t Have Any Savings
Some people are good at saving money, while others are not. If you’re one of the latter, any remaining debts you have outstanding when you die (for example bills, rent, leased cars etc.) will need to be paid off. Unfortunately, the debt doesn’t go away when you die, it is passed on to your loved ones. For people who have savings, these can be utilised by your loved ones to cover any outstanding debts. However, people living paycheck to paycheck should consider taking out a life insurance policy to cover your financial commitments.
However, it may be that you don’t actually need life insurance. This could be because:
You’re Have No Dependents
If you’re single and don’t have any young children, there is probably no need to take out a life insurance policy. You might want to take out cover to give your loved ones a cash sum at the event of your death to cover the cost of your funeral, however it will probably be more cost effective to keep a savings account and set up a will so they can inherit the money when you pass away.
You’re More Worried About Long-Term Illness
Life insurance cover will only pay out in the event of your death. Therefore, if you’re more worried about having a long-term illness, you don’t want all of your finances to be tied up in your life insurance policy instead of being put towards looking after you during illness.
Your Partner is a High Earner
If your partner has a salary high enough for your family to live on, it may not be worth tying your finances up in a life insurance policy. If your income isn’t enough to support your family, you may want to suggest that your partner takes out cover instead!
So you’re in debt, and you are struggling to manage. It is one of the worst feelings in the world. Not wanting to answer the door, or the phone; too scared to talk about it with your friends and family. It can be a real strain on your mental health.
But you are not alone. There are literally millions of people in the same situation as you, and it is important that you know there are several options available that can help you.
The first thing that people think about is bankruptcy. Even for people who know little about bankruptcy, it is a terrifying prospect that they would rather avoid. Bankruptcy is a legal debt solution, in which a licensed Official Receiver takes control of your assets, and your finances, to pay off as much of your debt as possible. This means they can take money from your wages, your benefits and sell your property.
What many people don’t know is that there are a number of other debt solutions available for people struggling with their debts:
Debt Management Plans
‘Debt Management’ is a phrase that a lot of people know, but few really understand what it means. Essentially, it involves negotiating with your creditors to lower the amount that you are paying each month. If you are lucky, they will agree to freeze your interest as well. This means that you can agree on a monthly payment that you can actually afford, and pay off the full amount over a longer period of time.
However, this is not a legal solution, and so creditors are not required to stick to it. It can also take a very long time to clear the debt, which will prevent you from being able to start fresh with your finances.
Individual Voluntary Arrangements
For a more legally binding arrangement when you have over £6000 of debt to more than one creditor, an Individual Voluntary Arrangement, or IVA, may be more suitable for your situation. An IVA will allow you to consolidate your unsecured debts into one affordable monthly payment, paid to a licensed Insolvency Practitioner, who will redistribute the money amongst your creditors. Legally, your creditors will no longer be able to contact you.
The amount of the affordable monthly payment will be based on your genuine income and expenditure, and you will pay this for only 5 or 6 years. After this time, your remaining debts are written off. Unlike bankruptcy, you will not be required to sell your home. However, if it has any equity, then you may be asked to mortgage it to pay your creditors. You could opt for an extra year of payment instead, however.
Debt Consolidation Loans
This is another way to consolidate your loans into one payment, so that you have only one creditor and only one payment to make. Debt Consolidation Loans are not legal solutions, but are initiated and managed by you. You take out another loan, and use it to pay off all your debts, and then repay that loan.
So if you have three loans: one of £500, one £3000, and one £1500. You take out a loan of £5000 to pay off each of those loans. Then you pay back the £5000.
This can be beneficial because large loans often come with smaller interest rates. However, if your credit score is already very poor, this benefit may not apply to you.
If your debts are small enough to be covered by a credit card, you can manually freeze your interest for a limited period of time by using a 0% interest credit card to pay off your debts. However, be aware that after this period of time, the interest rates will be very high, so you should be confident that you can pay them off in that period of time.
Debt Relief Order
Another solution is a Debt Relief Order, or DRO. This is a legal solution for people with less than £20,000 of debt and who have less than £50 in surplus income every month, and assets worth less than £1000. Unfortunately, this is not a lot of people, and the process costs £90.
If you meet those eligibility criteria, then the DRO is a great solution. Your application is submitted by your DRO advisor, and once it is successful, your debts are frozen and you don’t have to make any payments for a whole year.
After a year, if your circumstances have not changed, then your debts are written off. This means if your income has not improved, or your essential expenditure has not reduced, you can become debt free.
However, DROs are only applicable to unsecured debts, you cannot use a DRO on car loans, mortgages or tax arrears.
Here at PRS Update, we understand how it feels to let your money worries dominate your life, but, as you can see, you have many options to consider if you are in debt, and there is bound to be something that suits your situation. So, don’t let yourself worry too much, and don’t let your creditors scare you – you’re going to be alright.
There are more people than ever before registering as self-employed and tackling the working world alone – 1 in 6 at last count.
While you might have your area of work mastered, your book keeping down to a fine art and your tax returns worked out – there are some less immediately pressing issues that you still need to spend time thinking about.
Top of this list is your personal finance. You’re not in a position to just collect and present payslips anymore – so what do you do instead? How do you handle all those things that payslips or your employer had covered before?
We’ll take you through the major financial considerations you’ll have as a self-employed worker.
- Get insured
Although you might have welcomed breaking out of the 9-5 grind and making the most of your time as the boss – your enjoyment will quickly become despair if you lose the ability to work and cannot provide the financial support you need.
When you work for an employer you’re surrounded by a lot of things that stop you suffering if you can’t work – sick pay, phased return schemes and even health and safety law – but now you’re in charge of those things, and there’s little you’re going to be able to do if you just can’t bring the money in.
Fortunately, there are a variety of insurance products that are available for self-employed workers, each covering slightly different circumstances.
- Income protection
An income protection scheme is tailored around your role and your level of earning. If you are unable to work through illness or injury this type of policy will pay out a regular amount of money that will keep you, your personal life and your business afloat.
Just because you’re self-employed it doesn’t mean that your costs drop off if you’re not working, there are plenty of payments that are likely to need keeping up with – including car or van lease, finance costs, professional accreditations, start-up loans – and much more. Income protection means you can recover properly before getting working again.
- Critical illness cover
If you’re diagnosed with a critical illness while self-employed a policy of this type will pay you a lump sum – allowing you to handle business for a prolonged period of time while you recuperate.
Critical illness is unlikely to cover for smaller injuries and illnesses though – so make sure you’re covered for all eventualities.
- Life insurance
Clearly, no one anticipates needing life cover when being self-employed – but it’s these unexpected and unlikely occurrences that life insurance is there for.
If you have a family and significant financial commitments, having cover in place in case of the worst is really important – as it can let loved ones cope with your illness or passing without the additional stress and upset of dealing with increased financial burdens.
- Get a pension – and cover your state pension
A good pension scheme is a major benefit of working for an employer but when you become self-employed the responsibility is all yours when it comes to thinking about the future.
Self-employed workers can choose between three different types of pension:
- Stakeholder pensions
- Personal pensions
- Self-invested personal pensions
The type that’s right for you depends on your personal circumstances and how you will organise your business going forward – so it’s worth talking to an accredited pensions advisor about finding the right type for you.
Whichever kind you choose, it’s worth working in a way that resembles that of an employed worker – i.e. paying in an amount each month that you can budget for with your normal book keeping and financial management. That doesn’t mean that you can’t top up further down the line though – being self-employed gives you some flexibility if your income is less predictable.
It’s important not to forget about your state pension as a self-employed worker too. You’re still expected to pay your National Insurance contributions (NICs) – and must have done so for 35 years to benefit from the relatively new flat-rate state pension.
Employees pay ‘Class 1’ contributions – whereas self-employed workers pay a fixed amount of ‘Class 2’ contributions along with ‘Class 4’ contributions – which are based on profits. Both need to be kept up – but all add up to the same level of pension contribution. If you ever find yourself falling short – you can always top up.
You can pay up to £40,000 into a pension annually – and the lifetime limit is £1m. The HMRC’s “carry forward rule” also means that you can use the past 3 year’s contribution limits too – which is especially useful if funds have been tight as getting your self-employed business of the ground began.
- Finding a mortgage
It used to be that mortgages for self-employed people were very hard to come by – lenders often considered self-employed workers a less attractive and less reliable prospect for repayment, meaning that when mortgages were available, they were often at increased cost.
Then, the advent of self-certification mortgages saw this turn around – mortgages for people who were not traditionally employed were given on an ‘affordability’ basis – meaning that if you could demonstrate the means to pay – you could get a mortgage. It wasn’t long before this was seen as irresponsible lending though, and after the financial crash of 2008, self-certification mortgages were banned.
Fast forward to 2017 and lenders are becoming more comfortable offering mortgages to the self-employed – and since there’s been such an increase in numbers, self-employed people are now seen as a legitimate area of the market – and not just an exception from the norm.
If you’re hoping to secure a mortgage, there are some basics you’ll want to cover – having a minimum of 1 years filed accounts is important, with 2-3 being even more ideal. What’s more, mortgage providers are concentrating more on your field of work – rather than your employer, so if you’re working in the same industry – just with a different approach to how you’re paid – you stand a better chance of hitting the eligibility criteria.
Those of us who have tried to run a business know how much it takes a toll on your life. In our previous jobs, if we had them, we had clearly defined hours, and clearly defined projects. Tasks would have a beginning, middle and end, and you would work 9 to 5 to achieve them. But when you are running a business, it feels like there is always something you could do more of.
You could do more fundraising, you could do more promotion, you could do more networking; and why not start a little earlier, at 8am or 7am, to get as much done as possible? You can’t really just stop what you are doing at 5pm, either, so why not work a little longer – just until you’ve really achieved as much as is physically possible in the day? You are just being the best that you can be, right? If you don’t, you might not be a success, right?
Wrong. Your personal life is just as important as your work life, no matter what stage your business is at. Here are just a few reasons that it is just as important to have a personal life as a work life:
- Your Mental Health: being a work-a-holic can burn you out, and make you more prone to anxiety, depression, and all sorts of negative side effects that, while obviously damaging you personally, could also damage you professionally in the long term. If you ignore these problems, they are likely to get worse until the only way to get better is to stop working altogether.
- Similarly, some of your best ideas can happen when you are relaxed. Let your mind rest, and you might dream up a fantastic solution when you least expect it. A rested mind is an active mind.
- At the end of the day, you need to ask yourself ‘what are you doing it all for?’. There is nothing wrong with the answer being ‘for me’, ‘for the excitement’, or even, ‘for the customers who need my service/product/idea’. But most entrepreneurs will agree that they also do it for their loved ones. However, if the cost of earning money as an entrepreneur means you don’t spend any time with them – maybe the cost is too high.
- Finally, your mentality can affect your employees. Even if you decide that you don’t need a personal life, that doesn’t mean your employees aren’t entitled to one. Sometimes, bosses who mean well can accidentally promote a culture of constant overtime, just because they are the ones who set the pace and culture of the office. As well as being a bit mean, this can demotivate your staff and tire them out, making them less able to work efficiently.
Clearly, working that hard isn’t worth it. You are sacrificing yourself, your loved ones and your employees.
It can often feel very unnatural to let go and work less, when it is something you are so passionate about, but, although you may have forgotten it, the biggest and best advantage to running your own business (and more than likely the reason you wanted to do it in the beginning) is that you are your own boss, and you have complete control of your life. This means it is actually quite easy to recapture control of your life, but how can you go about doing it?
- Get used to writing out what work is essential, what work is very helpful, and what work is just a nice idea; or in other words, what you SHOULD do, what you COULD do, and what you WOULD do (if you had more time).
- Concentrate on the first two categories, and, if you can, try to plan doing one aspect of the third as a slow, long-term project. You can’t do everything at once – and you also probably shouldn’t.
- Then find your own equivalent of 9 to 5, which suits you. Maybe ask your loved ones when is best – you could time it to work around dropping your kids off at school, or always being able to make Friday date-night. But the most important thing to do is: stick to it!
- If you are finding that you need more time than that just to do the absolute bare minimum of what is necessary – then you may need some serious restructuring within the company. Delegate parts of your job to employees, or, if you can, create a whole new role to share the load with. If you are still at a ‘work-alone-from-home’ stage, consider cutting back on some of your aims, or pushing back their deadlines, so that you can cope working less hours.
- If you are struggling to let go of the long-term ‘would’ projects – make it your number one goal to build your company until you are able to hire someone to delegate all the ‘should’ tasks to – a Chief Operations Officer. Once you have done that, you can use all your time to work on ‘could’ and ‘would’ projects. This also means you are training someone up who could take on your role, should you ever decide to retire.
However you decide to do it, it is important that you have a work-life balance, even if the weight of the world is on your shoulders. If not for yourself, then for all the people who care about you, worry about you, and depend on you.
Finance is one of the sensitive areas in the business that determines the growth and expansion of the business. It is important to understand the importance of finance function in your business. The financial manager should be able to explain importance of finance function.
Importance of finance function
Enhance investment decision
This is the essential finance function which deals with the allocation of funds to short and long-term investment. It is referred to as capital budgeting. It helps in putting capital into the long-term business assets to get the highest return in future. Coming up with investment decision requires assessment of new investment in terms profitability and decision of using funds.
Guide in the financial decision
It is critical for every business to make the smart decision about where, when and how a business should acquire capital. Funds to run the business may be gained in different ways and channels which should be identified when making a financial decision. A reasoned financial structure always focuses on promoting highest shareholders return with little risk. In this context, market value of the business will increase and thereby an adequate capital structure may be achieved.
Enhance dividend decision
Every business targets to make a profit or positive returns. When the company makes a profit some of it or all the profit is shared among the shareholders as dividends although it is entirely decided by the financial manager as this is his/her key function. A dividend policy is followed to increase the market value of the firm and as result dividend payout ratio is computed for all shareholders.
Financial decision promotes the sustainability of liquidity in an organization to prevent the inability to pay the existing debts. Business liquidity, profit margins, and risk are all linked to the investment in the current assets. For the firm to able to sustain a tradeoff among profitability and liquidity, it is significant to invest adequate capital in current assets. However, current assets need to be well valued and disposed of regularly when they are not profitable. Also, they should be used during liquidity problems and periods of insolvency.
In conclusion, finance function is important for every business to grow and expand.
Soundness and strength of business depend on the availability of competency and finance with which it is spent. The scarcity of finance can ruin an organization while plenty of it can do wonders, and it’s even a well-established business. Finance boosts the viability and strength of the organization. It increases the firmness of an organization to face economic depression and losses.
Following are the finance functions in an organization:
Finance is a basic requirement for the organization. It marks the starting phase of every industrial project and business as well. Whether you start a partnership firm, sole proprietary concern, a charity institution, or a company you certainly require the huge amount of money. It is also critical for non-profit activities and profit-seeking.
Many individuals around the globe think that its extreme monetarily. With the present condition of the economy, the worry of the fund is gigantic. Many people are looking for free financial tips so that they can get back on track financially. You might be keen on this article on the off chance that you are searching for monetary exhortation.
You will need to check the qualifications of any money related consultant you apply for exhortation, paying little heed to whether it is free or paid guidance. In spite of the fact that a consultant with great accreditation can give a terrible exhortation. You require a counsel who truly takes a gander at your circumstance and offers exhortation in like manner, since guidance that is appropriate for one individual may not be the best for another.
It is fitting to converse with a few money-related consultants, and after that look at the different financial tips that you get. You can get a few distinct assessments and perspectives and either join a few things or pick which exhortation will fit your needs. It is best to discover a counselor that is a neighborhood, however, if you can not discover it locally, you can attempt on the web. On the off chance that you are doing budgetary counsel on the web, in spite of the fact that you have to do this precisely since you don’t know your identity managing on the Internet. A few organizations will publicize free budgetary guidance, yet you frequently find that once you begin taking an interest, they can begin requesting an expense for it and paying for it.
Or, then again, together with the board, they can likewise endeavor to offer you their items or administrations. When you are searching for money related exhortation on the Internet, make sure to solicit a great deal from questions and be watchful with giving individual data. A few organizations may look like great money related counselors, however, they can be just something that tries to offer you something. You should recall that not every person is straightforward, and some individuals are directly after your cash. Continuously utilize good judgment when searching for nothing monetary counsel, and on the off chance that you feel that something simply does not appear to be correct, it most likely is not, so simply leave and discover another person.
To change the way you take a gander at cash, you’ll need to begin with an arrangement, despite the fact that it might appear to be shortsighted. Be that as it may, this is fundamental, because your present designs don’t work the way you are searching for something new. So you need to make progress with the goal that you can move toward the path in which you have to go to improve your life.
Here are finance tip of the day that can change your point of view:
1. An auto can last a considerable measure longer than five years. It’s only a hunk of metal and plastic moving around on four tires. In the event that you can abstain from joining your sense of self to your car, you can spare a great deal of cash by driving your auto for a few more years. Put that auto installment into your retirement account rather and see what happens.
2. Know the five sorts of budgetary crises. Is it true that you are set up for each of them?
Home-related issues, for example, a heater breakage or a spilling roof
Significant auto repairs
Burial service related issues. Either paying for a burial service or setting out to one
3. Burn through five minutes on your finances each night. A solitary TV ad break can most recent five minutes. Survey the greater part of your money related exchanges for the day. You ought to have four minutes to save after you’re finished. Follow up on any disparities.
4. Make little cash objectives. These ought to be anything but difficult to fulfill.
I’ll spend under $75 on sustenance this week.
I’ll spare in any event $25 every Friday and store it in my investment account.
5. Get leaseholder’s protection. It’s just two or three dollars every month except can supplant your things in the event of theft or fire. Indeed, even your old PC and drain box racks merit a remark.
6. Discover approaches to engage yourself that are free. A significant part of the cash you spend just effectively makes you can rest easy. Rather than diverting yourself by obtaining things you needn’t bother with, locate some free types of excitement.
Books and recordings from the library
Go to free shows or tune in to music at home.
Toss a Frisbee.
Play cards with companions.
Plant a garden.
7. Pay off your little obligations first. You’ll fabricate force along these lines and feel a more noteworthy feeling of achievement. The other option is to pay off the obligation with the most elevated loan cost first. It bodes well, however it’s not as fulfilling. Choose for yourself.
Finance in business means the simple duty of providing necessary funds or money required by business of the entities like firms, companies, individuals and even others on the terms which are most favorable in achieving the economic objectives. Here are the main features of finance.
1. Investment Opportunities
In Finance, the investment actually can be explained as the utilization of money for the profit or the returns. However investment can actually be done in different ways like:-
Creating the physical assets by using money like development of the land, acquiring the commercial assets, and so on.Carrying out the business activities like trading, manufacturing, etc.Acquiring the financial securities which are like shares, units of mutual funds, bonds, etc.
Investment opportunities actually are the commitments of the monetary resources at different times with the expectation of the economic returns in future.
2. Profitable Opportunities
In Finance, Profitable opportunities are being considered as the important aspiration. Profitable opportunities means that the firm need to utilize the available resources more efficiently under conditions of the cut-throat competitive business. Profitable opportunities need be the vision. It will not result in the short-term profits at an
3. Optimal Mix of Funds
Finance in business means the best optimal mix of funds so that to obtain a desired and a determined results respectively. Primarily, the funds are actually of two types which is:
Owned funds (Equity shares, Promoter Contribution, etc.), andThe borrowed funds (Bank overdraft, Bank Loan, Debentures, etc).
The compositions of the funds need to be in such a way that it should not result in a loss of the profits to the Promoters or Entrepreneurs and need to recover the cost of the business units efficiently and effectively.
4. System of the Internal Controls
Finance in business is being concerned with the internal controls preserved in the organization or the workplace. The internal controls are the set of the rules and regulations which are framed at an inception stage of an organization, and theyâ€re altered according to the requirement of the business. Nevertheless, all these rules and the regulations are monitored in various intervals so as to accomplish the same thing which need to been followed consistently.
The word finance has its origins from the French language but was later adapted into English to mean the “science of money management”. That is just one of the many ways in which it can be defined. Finance, according to academicians, is the obtaining of funds and the proper utilization of funds.
It is also a field of study which concentrates on the study of investments.
Finance consists of three major areas. Personal finance is one of them. It can be defined as all the financial activities and decisions pertaining to an individual or household. It may include purchasing of insurance or even paying off loans and debts. There are four main components of personal finance which include; savings and investments, filling of taxes, cash flow assessment and the purchase of insurance.
Secondly, there is corporate finance. This is the area that deals with a company’s funding, budgeting, capitalization and the management of risks. Basically, this means those who are in this field are faced with the task of evaluating whether or not, an investment should be made by the company and if so, how it should be paid for and do the shareholders get dividends from said investment or not.
Last but not least, is public finance. This is defined as the involvement of the government in the economy. It consists of the collection of revenue by the government, which it then uses to provide and distribute public services and goods. It also includes policies, which could be implemented to ensure equal distribution of incomes, price stability and the growth of the economy. Central banks, such as the Federal Reserve, play a key role in public finance since they influence credit and monetary policies.
Finance is at the core of all economic activities and is, therefore, an indispensable part of our lives. The above is just a tip of the iceberg that is finance. It is an expansive field which keeps on growing each day.