Prepare an umbrella before it rains. This saying seems appropriate to remind that anticipatory steps are important to take to face an unexpected situation. This includes the matter of insurance. What insurance do you have? Is it enough to provide protection against possible risks in the future?
Investopedia writes, there are at least 3 insurance that you must have. First, life insurance; second, health insurance; and third, vehicle insurance. This time, we will focus on discussing the importance of having life insurance. Not only those who are married, you who are still single are also required to have it.
Understanding life insurance
What is life insurance? In general, life insurance is an agreement between an insurance company and a policy holder to provide a death benefit guarantee to the beneficiary of the insured person died. The insurance company will provide a death benefit by considering the premium payment by the insured.
In essence, life insurance provides protection for those you leave behind when you die. This is important for those of you who have a family that has been dependent on you economically. Coverages and guarantees provided through life insurance will provide financial backing for the families left behind.
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According to the LIMRA study, known as the Life Insurance Marketing & Research Association, when the main breadwinner dies, families with children will only be able to cover the cost of living for a few months.
It is also important to know the type of life insurance, namely whole life insurance and term life insurance . Whole life is life insurance that provides lifetime protection. Meanwhile, term life is a policy for a specified amount of time.
Reasons for having life insurance
For reasons no one can predict the risks that might occur in the future, everyone is advised to have life insurance.
“Those who have dependents or those who bear other people, whoever it is, whatever age they are, when they have dependents or bear someone else, then they need life insurance,” said Financial planner ( financial planner) from Finansia Consulting, Eko Endarto, when contacted by CIGNA, at the end of February 2020.
Eko explained, there are some things that you should consider as a reason to have life insurance.
First , everyone must have protection.
“We never know what will happen in the future. We can never predict what will happen in the future,” he said.
Second, having life insurance means we think of those we bear, not ourselves.
“Understanding of the need for protection is very minimal. So you have to understand correctly. Many think, if I pay, I lose because I don’t get a refund. Remember, insurance provides protection or protection, not return. When there is no protection, the risk is mainly for those left behind. “It means, when someone who has economic value in the family is lost, then the economy of one family is also lost,” said Eko.
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In addition, citing Business Insider , there are a number of compelling reasons you need to have life insurance:
- Having children If you have or plan to have children, then this is one of the reasons you are required to have life insurance. The longer you wait to buy the policy, the greater the costs.
- Married If your spouse or potential partner depends on your income to live his life, this is also a strong reason you must have life insurance. Life insurance will ensure they can survive if you die.
- Becoming a parent’s financial support Even though you are still single, you also need life insurance, especially if you have been a financially dependent place for parents. Life insurance policies ensure there is financial support that they will get if something happens to you.
- Having a high-risk job What happens in the future is unpredictable, but it can be anticipated. For those of you who have high risk jobs, one of the anticipations is to provide life insurance for your family. If something happens to you at work, then those left behind will be relatively safe.
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Things to consider before buying life insurance
Before deciding to buy life insurance, there are a number of things you should pay attention to. Eko Endarto said, one of which is to understand and know a number of reasons why you should buy it, as described above. He cautioned, don’t buy life insurance because you are a part of it.
“Do not let the origin have, as long as you buy. Poor, this will ultimately be in vain because it does not understand well why life insurance is important,” said Eko.
According to him, those who do not understand well the reasons for having life insurance will make the next mistake, namely not doing regular evaluations of the insurance they have.
Another thing that must be considered is “shopping” information about insurance products to be purchased, as needed. Eko emphasized, there must be a product that suits your needs. Before deciding on the right insurance product, you must know the conditions and risks that you may face. For example, how much risk should be borne by people left behind if you do not exist.
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Eko gave an example, in one family only one person who worked so far had been the basis of the family economy. So, the amount of insurance or insurance money needed is at least 50 times the income of the head of the family / breadwinner.
“That’s a minimum, 50 times the income. Ideally, 100 times the income. Must be calculated accordingly,” said Eko.
Another component that must be considered is the scope of protection you need, it can involve a number of things, namely, whether you need to pay funeral expenses, mortgages, child education protection, and others.
If you can’t decide for yourself, you can consult with an insurance agent or financial planner to plan the right life insurance needs. Some things must be considered to determine the right life insurance, including the age of the policy holder, employment, number of children, and other factors to ensure appropriate protection coverage to protect the family.