Life insurance is often a topic that people avoid discussing, yet it plays a crucial role in providing financial security for individuals and their families. The suitability of life insurance depends on several factors, including personal circumstances, financial goals, and overall health. In this month’s article, we explore the various aspects that determine the appropriateness of life insurance and provide insights into making informed decisions.

Why is life insurance important?

Life insurance serves multiple purposes beyond replacing income for dependents. Funerals, for instance, can be quite costly, especially if the family wishes to honour the deceased with a beautiful ceremony or return the body to their birth country.

The world is constantly evolving, and so are the ways we manage our finances. It is essential to understand that there is no one-size-fits-all approach to purchasing life insurance. Everyone’s situation is unique, and financial decisions are highly personal.

Life insurance offers dual benefits:

• It provides security for loved ones in the event of an early death.
• Serves as a vehicle for savings.

It is just one component of an overall financial plan, but it can offer flexibility and play an effective role in a long-term strategy.

How much life insurance does a client need?

An underwriter’s job is to evaluate the entire picture to ensure there is a valid purpose for life insurance at the amount requested. As an insurance advisor, it is essential to understand your client’s insurance needs. The amount varies based on personal circumstances and the type of policy. Generally, it should at least cover financial obligations in the event of death.

Review your client’s coverage needs regularly, especially after significant life events. Clients should consider purchasing what they can afford now because some coverage is better than none, and it can be increased later. If your client prefers permanent coverage but can currently only afford term coverage, note that most term policies offer conversion options to permanent coverage later.

When is the right time to buy life insurance?

Deciding when to purchase life insurance can be a tricky question. The right time to buy is when it suits your client’s personal circumstances. However, it is important for clients to understand that as individuals age, their health can change, affecting their insurability. Purchasing life insurance at a younger age can be advantageous, as people are generally healthier and can therefore secure lower rates.

Purchasing life insurance is an important decision that requires careful consideration of one’s personal and financial circumstances. By understanding the various purposes it serves, assessing your client’s needs, timing the purchase appropriately, and adapting to changes, you can ensure that life insurance is a suitable and beneficial part of your client’s overall financial plan.