Top 6 Reasons to Get Life Insurance

Top 6 Reasons to
Get Life Insurance

People take out a life insurance policy for a variety of reasons; added a new member to your family, personal medical scare, death of a loved one and many other reasons spurn someone on to explore if life insurance is right for them.  Don’t get us wrong there are easily another 6 items we could add to this list, it’s not exhaustive. Here are our Top 6 Reasons:

1) Have Dependents

You have people that rely on your income for their wellbeing.

2) Replace Future Earnings

Help family replace lost income to cover future expenses & maintain their standard of living.

3) Mortage, Rent or Other Debt

Cover the balance of a loan or other personal or debt.

4) Children's Education Expenses

Also known as Education Fee planning, makes sure there are funds for university tuition, books and accomodation

5) Final Costs

Including burial, funeral, repatriation and other legal fees

6) Critical Illness Protection

73% of the global death rate was from non-communicable diseases & critical illnesses.

043 child

1) Have Dependents 

Most people who take out a life insurance policy are doing so because they have people that rely on their income for their wellbeing, whether that’s a spouse, children, parents or multiple people.   You’re a prime candidate for life insurance if you have people who rely on your income to keep and maintain their standard of living. Some questions:

  1.  How would they pay the bills?
  2. How would their standard of living change?
  3. What changes would they need to make?
  4. What future plans would now be in jeopardy?

Life insurance can ease the financial burden and stress of losing a primary or a major contributor to the household income. Even if you and your spouse have similar incomes, 50% of income would be lost. Do the expenses drop proportionally? Likely not. The death benefit of a life insurance policy can help your loved ones maintain their standard of living and quality of life by providing them a financial boost.  Learn the 7 Awesome  Benefits of Term Life Insurance. 

life insurance

2) Replace Future Income

Life insurance replaces lost income and can help cover the immediate cash needs, as well as ongoing and future needs. Some examples of the the ongoing cash needs include:

  • Housing
  • Food
  • Utility Bills
  • Transportation expenses
  • Healthcare and health insurance
  •  Education
Some examples of future cash needs include:
  • University fees
  • Spouses retirement
  • One-off purchases like a child’s first car

There are many things to consider when determining how much life insurance you actually require, quite a bit more than you may originally think. At Tenzing, we take a calculated approach using a life insurance calcualtor such as the one from Unisure.  

 

045 house

3) Mortgage or Rent

The place your family calls home is no good if they can’t afford the mortgage payment or the rent.  This is a major consideration in determining how much life insurance you require. They could always sell, downgrade, re-finance the payments, but is that what you’d want for them? 

“But Tenzing, I own my house ouright”

That’s awesome, you don’t require as much and can save some on your premium.  Are you from a country with inheritance taxes?  

  • United Kingdom
  • United States
  • France
  • Japan
  • South Korea
  • Spain
  • Italy
  • Ireland
  • Belgium
  • Germany
  • Greece
  • Netherlands
  • Taiwan
  • Finland
  • Denmark
  • Iceland
  • Turkey

Such a massive asset as a house, if you passed on such a great asset as a house to your kids, you could also be passing on a massive inheritance tax bill as well. 

027 mortarboard

4) Children’s Future Education Expenses

It’s probably fair to say most people would like their children to be able to attend whichever university or institute of higher learning, without having to go into debt from student loans. Life insurance can help pay for the cost of continuing education for children at the projected tuition fees are by the time they reach the appropriate age. 

With rising cost of university fees, it’s important to speak to an advisor, who can help you determine an appropriate level of coverage. If you’re only factoring in the cost of tuition now, then you’ll unfortunately be short. Here’s a quick study of the rising cost of education at the University of Oxford:

Year
UK/EU Student
Int'l Student
2008
£3,145
£17,800
2011
£3,375
£20,470
2014
£9,000
£23,985
2017
£9,250
£34,576
2020
£9,250
£38,945

Source (download required)

It’s not hard to see the historical increases and project out where costs will be in 10 years, 15 years, 20 years, etc. When you factor in other university feeds for room & board, books and other miscellaneous expenses, it’s easy to see why university education alone is a massive reason to get life insurance. 

 

Did you know?

A common way people determine their policy term length based on how long until their kids would (presumably) be financially independent. Ex. Youngest child is 5 years old, take 20-year term length. 

 

life insurance

5) Final Costs

The costs of burials & funerals are rising globally, from the grave plot, casket, cremation, service, the costs can easily top $10,000 usd.

Life Insurance Funeral Costs

If you’re an expat abroad, then there could easily be further expenses for cremation, casket arrangement, legal costs for repatriation of the body. This may be covered as part of your health insurance policy’s mortal remains benefits, but if it’s not, that’s easily another $10,000-$25,000 depending on preparation of the body and where the repatriation would be to. Life insurance can help pay for immediate final expenses. 

043 transfusion

6) Critical Illnesses

Life insurance is not purely about an untimely passing as most people think. With the average life expectancy rising as healthcare gets better, you’re more likely to get a critical illness and survive than ever before. Some stats to digest of how the global death rate has changed from 2000 to 2017. 

Life Insurance Cause by Death 2000-2017Life Insurance Critical Illnesses

So the questions to ask:

  1. What happens if you’re unable to work and your income stops? 
  2. How long would your company retain you?
  3. What would happen to your health insurance?
  4. What about your income and other normal ongoing expenses? 

See life insurance is so much more than just purely a death benefit. In fact, Critical Illness coverage may actually be more important when the chances of getting one and having it affect you personally are so high. 

 

“The cost of a life insurance policy won’t bankrupt a family, but death or a serious critical illness could.”

1607930392 40 Top 6 Reasons to Get Life InsuranceQuinn Miller- Managing Partner | Tenzing
 
 

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    Patrik Shore Tenzing Pacific Services

    Patrik Shore

    Senior Advisor
    From Sweden & New Zealand
    7 years' insurance experience
    Joined Tenzing in 2019
    Crim Science
    Speaks English and Swedish

    Speciality:
    - Savings Plans
    - Health Insurance
    - Life Insurance