Why Do I Need Life Insurance and Types of Life Insurance (Part 1)

It's never a "go-to" conversation when it comes to talking about life insurance and no one likes to talk about death. Not many will take the time to research about life insurance or purchase one. Even if one knows about life insurance, they might find purchasing one a hassle, and not see the importance of getting one, or try to delay getting one.

However, life is challenging and a series of important milestones, and in my opinion, life insurance gives me a sense of security, as I never know when things will happen to me; knowing that my family will be greatly taken care of, not being a burden to them once I become handicapped or if I am no longer there for them.

My wife is an inspired freelance graphic designer who works from home, making me the primary breadwinner. Although we do not have children yet, we are planning to leave an inheritance to take care of our future expenses, and be responsible for our outstanding debts, mortgages, and even funeral costs.

So why do I have and need life insurance?

1. Pay for Final Expenses

Funeral costs could be thousands of dollars depending on the range and scale of the ceremony, and this might be too much for my wife and future kids both financially and emotionally.

Unexpected death due to illnesses or accidents might require medical costs which adds up to another financial burden to your family whom you had left behind. It will be a good idea to also invest in medical insurance for medical attention which doesn't lead to your passing.

2. Supplement your Retirement

Surprise? I am sure you only thought of death benefit when it comes to life insurance. Annuity could be a good plan, which allows you to enjoy a steady stream of income for the rest of your life. There are a couple of my clients opted for yearly payout in order to spend their retirement, traveling and seeing the rest of the world!

3. Cover Children's Expenses

YES! Having children are the biggest reason why people get life insurance. All parents would want to take care of their children till the end of life, and ensure that they could afford a quality education. These expenses also includes, childcare and other additional activities and lessons outside school. Having additional coverage such as endowment can help to accumulate savings till your child is mature enough (till a certain age) and get a withdrawal for his or her needs.

4. To Replace Spouse's Contributions

Having a life insurance coverage on your spouse will be great, whether if he or she is a stay-at-home spouse or part of the working group. Take me for example; my wife is a freelance graphic designer who works from home, takes care of my meals and house chores. Even if she doesn't contribute a lot financially, she plays a big part at home, especially if children comes along. You might think that you can do this all alone once something unfortunate happens to your spouse, but having additional financial help may allows you to hire help especially if you child or children haven't yet begun attending school. News is childcare is expensive!

5. To Replace A Primary Income

As I am the bread winner of this family, which means that my wife would struggle with the housing loan, regular bills and other house expenses without my monthly salary. However, our life insurance would be able to cover our outstanding housing loan and leave enough for my wife to pay for her living expenses. The payout should last till she gets a permanent full time job. If you have children, the payout can do a lot for them and a single mum.

I hope that these reasons can help you decide when you are sorting and planning your finances together with your spouse. Don't be afraid or superstitious to talk about death with your spouse as It's never too early to start planning as you will never know when life decides to take you away. My next post will cover the rest of this topic and if you have any doubts of enquiry, don't hesitate to contact us or email me at winstonyangwj@rep.greateasternfa.sg.

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