How important is life insurance?

By: Charles Amoroso

I have been investing for almost 3 years now. My mind was opened regarding Investments and Entrepreneurship by the book “Rich Dad Poor Dad” it totally changed my way of thinking regarding the subject of money. From that simple book, I have read almost every book regarding personal finance but none of them gave so much emphasis on life insurance.

For some, life insurance is subject they don’t want to talk about… because it is about death. Well, they are right… but I have to remind them that death is inevitable; sooner or later all of us will have to die some due to accidents, disease, or just due to old age. Whatever it is, there’s no way of knowing when we would die…

Now, where does life insurance comes into play in terms of building a strong financial foundation? Any Financial Planner would agree that life insurance is the corner stone of a personal financial plan. Because of the importance of proper protection in case you die sooner your family would not suffer from financial problems (Estate Tax, Funeral, Debt, Mortgage, College education). It is much more important for someone who is the breadwinner of the family, because if he dies all his dreams for his family will just fades away… Now, you don’t want that happen to right?

Life insurance primary role is to protect the family until it can build up other financial resources. It does not replace “YOU” but it replaces the income you produce which the family is dependent upon. But sooner when you build up ASSETS your INSURANCE needs will go down, unless in some cases life insurance is use for the payment of ESTATE TAX (this is another topic).

Look at it this way, If YOU unexpectedly die who would take care of the family, financially? Who would pay for the funeral expenses? Who would pay for the Hospital bills? Who would pay for the amortization of your house? Who would pay for the tuition fee of your children? That is also one of the reason our Kababayans grow deeply in DEBT because of the untimely death of the breadwinner of the family… there resort would be to “UTANG” which is not the right thing to do, that is why adequate protection is needed.

The next question is how much protection (life insurance) you need? (This is another topic).