What You Need To Know About Life Insurance (Part 1)

“Life insurance is something that you pay to make you poor while you live so you can become rich once you die.” This was a common joke that I used to hear from people. When I was younger, I actually thought that this is true and getting life insurance is just an advance form of a scam.

As the years passed by, I started to learn more about financial literacy and I realized that getting life insurance is no joke. In fact, it is actually a crucial step in your journey towards financial freedom. What is life insurance? Who should get life insurance? Why do you need to get one? What are its benefits? Is it really worth it? What do I need to consider before I get a Life insurance? These are just some questions that I hope I’ll be able to answer in this two-part article.

What is Life Insurance?

Life insurance is a contract between a policy owner and an insurer, where the insurer agrees to pay an insured’s beneficiary a benefit upon the occurrence of the insured individual’s death or other event, covered by the policy(riders) such as when a terminal or critical illness occurs. In return, the policy owner agrees to pay a stipulated amount called premium at regular intervals or in lump sums.

Who should NOT get Life Insurance?

Not everyone needs to get life insurance. I believe that there are 3 main reasons why you shouldn’t get life insurance.

First, if you don’t have family, dependents, friends, or anyone that you care for and you plan to grow old and die all by yourself, I think you really don’t need to get one as it will just be an extra expense for you.

Second, if you are EXTREMELY rich and you are 101% sure that your wealth can sustain the needs of your love ones and their descendants in case you die. Getting a life insurance is actually optional in your part (you may still get one if you don’t want your love ones to spend anything on your funeral or on estate taxes upon your death). What you really need is a tax lawyer, accountant or an estate planner to help you distribute your wealth among your love ones.

Third, if you are EXTREMELY poor and you won’t be able to pay the premium even if you will just afford the cheapest life insurance that is available for you. (Although, I suggest that you work hard and work smart until you are able to increase your income and you can eventually afford to purchase a life insurance.)

Who should get Life Insurance?

If you do not belong to any of the people above, then I believe that Life insurance would definitely play an important role in your life.

The most common persons who would need life insurance are married individuals especially breadwinners. I’m sure that you don’t want to leave your family, in debts or in financial distress in case of your demise. If you don’t have kids yet, but you plan to have one in the future, then you need life insurance because you want to be assured of your child’s future.

If you are a housewife or a househusband, then you would also need life insurance. It is a mistake if you think breadwinners are the only ones who need to get one. Childcare, cleaning cooking, and other household activities are all important tasks that a stay-at-home spouse does for a family. With life insurance, your family can afford to make the choice that best preserves their quality of life.

Single parents are also the ones who would need to have life insurance the most because they are basically the breadwinner, caregiver, cook, maid and many others for their children. With so much responsibility resting on their shoulders, they need to make sure that they have enough life insurance to safeguard their children’s financial future.

If you are single like me. 😛 You might think that single individuals don’t need life insurance but that is really not the case. Some single individuals need to provide financial support to aging parents and having life insurance would be a great help in case of an unforeseen event occurs. A single individual would also need at least enough life insurance to cover the costs of personal debts, medical and funeral bills. Basically, you don’t want to leave a legacy of unpaid expenses to your family.

Also, since you are single, then I suppose that you have less financial obligation compared to married individuals. This means that you have more chances of creating a stable financial foundation. If you’re young, healthy, and have a good family health history, your insurability is at its peak and you’ll be rewarded with the best rates on life insurance.

This is just the first part. If you think that you are one of those who need Life insurance, Then please proceed to the 2nd Part of this series. We’ll discuss the different types of life insurance available to help you decide which one you should avail.

“Life insurance cannot prevent your death, but it prevents your plans from dying with you.”

Photo credit: dcpinsurance.bizourbusinessnews.comthebank.vn

I hope this article taught you something about how to achieve success.
Please don’t forget to share if you like it! :)

I Struggle, I Win!
Jeypi Kyu

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  • Been thinking of having an investment for this. Soon I guess. ☺

  • Informative article bro. “Life insurance cannot prevent your death, but it prevents your plans from dying with you.” I liked how you ended it. If you were an insurance guy, I would definitely buy your product! Haha

    • Thanks! Hahaha. Maybe someday. I’ll update you thru this blog in case I become one. 😛 so I hope you’ll be checking this blog every now and then. 🙂 But really, I appreciate your compliment and I’m glad that you liked the post.!

  • I’m wondering, what will happen if the insurance company gets bankrupt? Who will I run after for claims? In case of a bank deposit, PDIC will cover you up to 500k.

    • Hi roselle, from what I learned, in the Philippines, Insurance companies are under the Insurance Comission (IC) which regularly checks the financial stability of a company. In case of bunkruptcy, IC mandates another insurance company(one which is higher/more financially stable) to purchase the loosing company. Thus, clients would still be able to receive their benefits. So technically, we don’t really need to worry much about an insurance company going bankrupt. Although in choosing a company, I suggest that you check the credibility, financial status, and feedback of other clients before choosing one. 🙂

  • that was a great article , i’m with you in this

    • Thanks a lot Houda. I’m still learning more about the said topic though. Glad you like it.:)

  • I’ll be needing this soon. Haha

  • Yamini

    This is such n informative article. I was contemplating if I should invest in life insurance or not. Thanks for clearing my confusion. I will be investing soon.

  • Very informative. I’ve thinking about this. But still weighing to where such investment would be.

  • Dave

    great post its amazing that you make such good articles.I hope you’ll continue to write things like this. 🙂

  • Ched Dayot

    I have a similar article like this that is lined up. 🙂 Glad to have an insurance.

  • thanking God for employments that provide excellent insurance. It is a benefit I pray we will never get to claim, though.

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  • Thanks for the advice! I don’t i can apply for investment yet because im still a student.

  • Very informative article, It will be dangerous to travel without insurance

  • I’m about to get a life insurance this month before my birthday. Haha. I also believe that life insurance is important

    • Jeypi Kyu

      That’s great! be sure to think thoroughly before you choose though. Don’t immediately get the 1st one recommended by the advisor. Try to assess each policy first. 🙂 and congrats for being protected soon. 🙂

  • I liked what you pointed out on who should NOT get an insurance, haha!

  • I love how you wrote this article — witty, concise and informative. Not boring at all. And speaking of life insurance, this should go on our (husband and I) priority tasks to discuss and act upon esp now that we are going to be three! 🙂

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