Do you really need life insurance?
Home, car, pet, private health—the list of ‘must-have’ insurances seems never-ending. So, is life insurance something you also need?
What is Life Insurance?
Life insurance, or Risk Insurance, can cover a range of personal insurance policies, from a lump sum if you pass away or are diagnosed with a specific medical condition, to payments if you are sick or injured and unable to work. The purpose is to ensure your loved ones are financially secure when you are no longer there to support them, or to provide financial support if you are unable to continue working due to illness or injury.
Why Might You Need Life Insurance?
Your ability to earn income and maintain your lifestyle is your biggest asset. If you rely on work for income, having sufficient protection in place to fund your lifestyle if you can't work is not just a nice-to-have; it's crucial. Life insurance means you can pay your mortgage or rent, still go on holidays, and maintain your quality of life even if you are unable to work because, unfortunately, the bills don’t stop just because you can’t work.
When my ex-husband stopped working at 38 due to a medical condition, our expenses didn’t stop—in fact, they increased! Despite the sudden drop in income, we still had a mortgage to pay, family goals, and plans to travel. Plus, his addiction to buying surfboards didn’t suddenly end. A lot of people think that life will be so dramatically different that they won’t want all the things they enjoy now—but it’s rarely the case.
I know insurance is another expense, and in tough times, we need to watch where our money is going to make ends meet. But consider this:
Your Biggest Asset is You!
No doubt you are insuring your car that might be worth $5k, $10k, maybe even $50k. But what about your biggest asset—your ability to work and earn income?
Imagine your work offered you two options:
A $100k salary, but if you can't work, you don't get paid.
A $95k salary, but if you're sick and can't work, you still get paid at least 75% of that income until you're back at work or ready to retire.
It's a no-brainer to me! This is what insurance does.
Stay Proactive with Your Coverage
Getting advice from a qualified financial adviser and regularly reviewing your cover to make sure it remains right for you is essential. Life changes, and so do your needs. Regular reviews ensure you’re not overpaying and that your coverage is sufficient for your current situation.
Life insurance is a critical component of a comprehensive financial plan. It protects your most valuable asset—your ability to earn income and maintain your lifestyle. By understanding its importance, learning from real-life examples, and staying proactive about your coverage, you can ensure that you and your loved ones are financially secure no matter what life throws your way.
(Example only. Numbers for simplicity—insuring your income may not be $5k but makes for easy math to show my point.)