Is Life Insurance Needed – No

Insurance industry insiders sometimes refer to life insurance as ‘love insurance’. Any other form of insurance may benefit the insured while the insured is living. However, life insurance is not for the insured, but beneficiaries. Therefore, life insurance is something that you should purchase when you have financial dependents or specific reasons (such as mortgage protection). As a protection product, life insurance is a luxury – not a need.

Ironically, life insurance does not protect the insured directly. Basic coverage becomes superfluous in times when the livelihood or health of the insured is under threat. Before you can look after your family properly, you have to make sure that you cover other needs – particularly health coverage – first. Once you do that, you have the option to protect them if necessary.

When persons are strapped for cash, life insurance is often the first to suffer when priorities are established. This justifies the position of life insurance as a financial luxury. While life insurance may have been bought for a specific need at one point, the need may not be so pressing at the time when funds are needed or when circumstances change.

In the context of the financial pyramid, several independent advisors do not classify life insurance as the first port of call. Medical and health insurance are more important. In fact, life insurance is only mentioned if certain needs arise or trigger events occur. When it seems necessary, life insurance only satisfies the emotional desire to offer financial protection for your family. Even if it is used for business needs or mortgage protection, there are specialised plans that can be utilised to cover those.

In situations where life insurance might become necessary, financial advisors recommend term insurance. Term insurance is temporary insurance. This suggests that life insurance merely covers an eventuality within a specific period. In the few situations where life insurance is needed, it may only be temporarily necessary!

Life insurance is not absolutely necessary if you have collateral or sufficient funds to cover your final expenses. There are those who have enough money to self-insure. A young, single and dependent-free adult would have little need for life insurance. Once savings and investments are started early, these funds can be used to create an estate for beneficiaries.

To stretch the truth is to say that life insurance is not necessary in certain contexts. It can come in handy at certain points. However, if you were forced to choose, there are several alternatives to life insurance. Therefore, it remains a financial luxury – a product that you should purchase when you have every other protection product covered.