3 Reasons Why You Must Have A Life

For most of us, our first encounter with life insurance is when a relative, a friend, or in my case, a relative of a friend approaches us to buy a plan.

 

We do not shop for it – rather, it is offered to us and more often than not we buy it out of accommodation without understanding its value.

Is life insurance so important that we need to proactively seek for it, or is it an unnecessary cost that insurance people sugarcoat as an investment? While you may be leaning toward the latter, there are actually 3 vital reasons why life insurance should be part of your financial plan.

Settle all immediate financial needs.
Apart from the emotional burden, families that will be left behind when someone dies will incur immediate financial burden such as funeral expenses, hospital bills, estate taxes, and unpaid debts. These things can put a heavy toll on your family’s finances.

If you are single, the “immediate financial need” item can serve as good starting point to gauge how much insurance coverage you initially need. This will be the amount of economic loss that your parents or family members will have to absorb in your untimely passing.

Secure child’s education.
Parents, this is one of the compelling reasons why we need to have life insurance. As a parent, one significant life goal that we have is to provide the best education possible for our children. If you have saved up enough to cover your child’s future education needs, then you can cross this off your list.

However, the fact remains that majority of us are still in the process of building our education funds and the haunting question remains: "if I die tomorrow, will my savings be enough to ensure the continuity of my child’s education?" If the answer is “no,” consider life insurance as your safety net while building your child’s education fund.

If you do not have that amount stashed in your bank or investment account yet, consider getting life insurance coverage for that amount and sleep sound at night knowing whatever happens to you, your child’s education is secured.

Replace contribution to household income.
I am a husband and a father. If I die, my family will grieve for 3 losses: my wife will lose a husband; my daughter will lose a father; and my family will lose the income I contribute on a monthly basis.

The first two are irreplaceable but the third one is something that can be replaced by life insurance. If your family relies heavily on you to provide for their financial needs, consider yourself as the most important income generating asset in the family and it is only fitting to protect that asset and the income it provides in every way that you can. This amount will take care of your family and ensures the continuity of their lifestyle even when you are gone.