SEVEN REASONS WHY YOU NEED LIFE INSURANCE.

Reason 1: To help you prepare for life’s uncertainties.

Peace of mind. That is one of the many things that a life insurance coverage can give you. It helps you to be prepared when life’s uncertainties happen. This Corona virus has affected a lot of people globally. This pandemic respects no race, age, profession, economic status or gender. No one has immunity against it. Even breadwinners can suddenly be taken out of the picture.

What Life Insurance gives you.

So what happens if you suddenly stop breathing? If you are a parent supporting your family, can you visualize their future without you in it? How much money would you leave them with when you are permanently taken out of their lives?

A life insurance policy can help you address that need so that you don’t need to worry if the time comes. The insurance proceeds will definitely help your loved ones cope with the financial burden brought about by death in the family. Financial security can lighten the emotional difficulty a family goes through when the person who brings food to the table passes on.

Reason 2: To help you set up disciplined savings

With all the temptations in the world enticing us to spend, spend and spend, it is difficult to save money every time you receive your paycheck. Who would want to save rather than spend when that BIG SALE comes along?

Getting a life insurance policy enables you to start a disciplined form of saving. It’s a way to set up deliberate savings because for most people, saving money is a great challenge. As you apply for an insurance policy, you are asked how long you want to save/pay for it. Mode of saving/payment can be every month, or quarter, or semi-annual or annual. It’s like buying a condominium on a staggered payment basis and observe specific terms of payment.

Reason 3: To help you build an additional source of income for the future.

To promote employee loyalty, most companies offer attractive retirement package for their employees. If your company is one of those, congratulations are in order. I am so happy for you! However, even your company’s retirement benefit may not be enough for your retirement years. What if there’s an additional fund to receive on top of your company’s retirement benefit? Wouldn’t you be happy to have it? Of course you will be!

Portion of your premium payments to your life insurance policy (specifically Variable Life Insurance) is invested by the insurance company’s fund managers.

These investments can grow overtime and therefore give you “future money” that you can withdraw and use as additional retirement funding.

Reason 4: To help you lessen your worries due to stock market’s volatility.

In the last ten years, a lot of people have experienced growth in their investments despite the market’s volatility. Since your premiums are constant contributions in the form of “savings”, the market’s volatility is reciprocated by the constant inflow of investment.

This concept is best understood when it is likened to “dollar cost averaging” (DCA). DCA is an investment strategy where total investment is divided across periodic purchases in an effort to reduce the impact of volatility on the overall purchase (source: Investopedia).

Reason 5: To provide you a good source of emergency fund.

Picture this scenario: all your money is invested in the stock market, then Covid-19 strikes and you lose your job. Withdrawing money from your stock market investment becomes inevitable. Since market is down, immediate pull out might mean taking a loss.

If your life insurance policy has accumulated fund/cash values and dividends (for a traditional plan) already, then you can either withdraw from its account value or borrow from its accumulated cash value.

Therefore, there is no need to withdraw from your stock investments and realized loss is avoided.

Reason 6: To help you avoid timing the market.

When getting a life insurance policy, you don’t have to assess whether the market is up or down. Some people wait and time the market before they invest. They attempt to predict future market price movements. Their prediction may be based on an outlook of economic conditions resulting from technical or fundamental analysis. However, in getting a life insurance policy, there is no need to check several factors leading to the targeted gain. When your insurance policy application is approved, you are covered whether the market performs or not.

What is the difference between your money being in investment or in an insurance policy when something happens to you? The current value of your investment when you are taken out of the picture is the amount your family gets. What if your investment is losing at the time of your death? Your family loses money. But in life insurance, your family gets the full death benefit however the stock market performs.

Reason 7: To help you create an estate.

Having a life insurance is an effective way to create an immediate estate that allows passing on of wealth to your loved ones and even to generations  after them.  Life insurance is primarily used in Estate Planning (which I will discuss in another blog) in a form of creating another asset. By directing a percentage of your net worth or income to pay life insurance premiums, you can leverage your money as the insurer guarantees payment of death benefit (which is way bigger than the premiums you paid) to your named beneficiaries when the time comes.

Even if you are just starting with your career or business, and have not built your assets yet, life insurance enables you to create an estate similar to buying a real estate property but at a more affordable cost.  When buying a property, you need to put in at least 20% down payment. However, you can get life insurance based on your budget preference and you do not need to pay a percentage of the coverage for your beneficiaries to get the full death benefit. As long as the set premiums are paid, you and your loved ones are assured that when you are taken out of the picture, that estate you have created for them will be passed on to them.

So, when is the best time to get a life insurance? NOW! Please email or contact me to know