Insurance is there to provide you that protection that family, friends may not provide. As Bode Opadoku, managing director/CEO, Nigerian Agricultural Insurance Corporation (NAIC) puts it, if you will be unable to replace your asset when you lose it, take insurance, he said.
A rich man that has plenty of cars in his garage may not feel it so much when one of them is stolen and he can afford to buy another one to replace it without sleepless night.
This is not the same with the poor or one that is managing. If the wind blows of the roof of the poor man’s house, he may not be able to replace it unless people come to his rescue. If his only car is stolen, he may not be able to buy another one in the next six months.
With these, it becomes clearer that the poor who may not have a reserve cash to replace lost assets when it happens truly needs insurance protection.
Experts say insurance is for everyone as longer as you have dependants, meaning that whether you are rich or poor, and as longer as you will not be there at a certain time to provide for your dependants, then you need insurance.
So, one way or the other, we all need life insurance for either our self or for our dependants.
So the first assessment test to actually know where you belong in this divide is to do a risk profile of yourself and your family, and this can be better done with the help of a personal finance consultant.
It is also called health check in insurance, and this enables you ascertain once risk profile and what possible insurance products will suit the situation.
According to experts, the important thing is to first determine whether you need life insurance, which kind is best for you and carefully calculate how much you need.
If you have dependents to protect and don’t have enough savings, you definitely need insurance. Then if you want to protect your family against the destruction of your business or estate after your death, whole life or universal life insurance has to be considered. But if your main concern is to protect your family against a loss of your income, term insurance is the way to go.
Life insurance is designed to protect your family and other people who may depend on you for financial support. If you die and lose your income, the people that are dependent on your financial support will lose that income, so life insurance can help cover some or all of that loss depending on the policy you choose. But there are instances where life insurance can be beneficial even if you have no dependents, such as your desire to cover your own funeral expenses. Here are some guidelines to help you decide if life insurance is the right choice for you:
Children: Children do not need life insurance. Yes, there have been cases where life insurance for one’s child has been a blessing, but in the majority of cases, children do not need life insurance since no one depends on income from them.
Beginning families: Life insurance should be purchased if you are considering starting a family. Your rates will be cheaper now than when you get older and your future children will be depending on your income.
Established families: If you have a family that depends on you, you need life insurance now! This does not include only the spouse or partner working outside the home. Life insurance also needs to be considered for the person working in the home. The costs of replacing someone to do domestic chores, home budgeting, and childcare can cause significant financial problems for the surviving family.
Young single adults: The reason a single adult would typically need life insurance would be to pay for their own funeral costs or if they help support an elderly parent or other person they may care for financially. Otherwise, if one has other sources of money for a funeral and has no other persons that depend on their income then life insurance would not be a necessity.
Non-child working couples: Both persons in this situation would need to decide if they would want life insurance. If both persons are bringing in an income that they feel comfortable living on alone if their partner should pass away, then life insurance would not be necessary except if they wanted to cover their funeral costs. But, maybe in some instances one working spouse contributes more to the income or would want to leave their significant other in a better financial position, then as long as purchasing a life insurance policy would not be a financial burden, it could be an option.
Elderly: As long as you do not have people depending on your income for support, life insurance at this stage in life would not be necessary, unless again, you do not have any other means to pay for your funeral expenses. But, be aware that purchasing a life insurance policy at this age can be very expensive. Before doing so, first talk to a financial advisor or accountant about looking into other saving options to pay for your funeral costs before considering life insurance.