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What is life insurance?

When it comes to insurance, you won’t know how much you need it until you need it.

What is life insurance? Why do I need it? Can I just save the money? Am I too old? Am I too young? Insurance is a fraud!

These are a few of the common questions and misconceptions I come across daily when it comes to life insurance.

Have you ever heard the saying, “knowledge is power”? Well, by understanding the different tools available to mitigate financial risk in your portfolio, you have the power to change the trajectory of your life and that of your loved ones.

What exactly is insurance; how does it work? Simply put, insurance is the transfer of financial risk and liability from yourself to the insurer, at a cost. For example, when you purchase a brand-new car, you wouldn’t want to pay out-of-pocket for any damages if you were to crash it, right? That’s the beauty of insurance—the risk of unaffordable disaster is assumed by the insurance company at an affordable premium. In other words, you get to protect the cost of your vehicle in a worst-case scenario, and you could even get a brand-new car if you’re covered comprehensively.

The above can also apply to your home, which for many people is their biggest asset. In fact, in most cases, the first thing required the minute you buy a house is to insure the building. This means the risk of potential disaster is then assumed by the insurance company. For example, if there were damages due to a break-in or an accident, the cost to repair those damages would be taken care of by the insurer.

These examples illustrate the benefits of insurance for our material assets. However, there is one asset that I feel is far more precious—and, in my opinion, it’s the only asset that’s set in stone. This asset is called your life.

Without your breath of life and energy, none of your financial responsibilities or desires can be fulfilled and, to really put things into perspective:

  • Your car is not a true asset because its value depreciates the minute you drive it out of the lot.
  • Your home is not an asset until it’s paid off—and, if you pass away and leave behind a mortgage for someone else to fulfill, you may be leaving behind a burden.
  • Your life is the biggest asset because, without it, you wouldn’t be able to make anything happen at all.

Interestingly, both motor and home insurance are mandated by law. Oddly, life insurance—which, in effect, would be insuring your most valuable asset—is not. Perhaps this is why many people have no idea how amazingly beneficial it is.

Did you know:

  • 96% of people would honestly say that life insurance is something everyone needs
  • Less than half of those persons will have life insurance.
  • Most people would be grateful to receive a death benefit from the death of their parents or grandparents
  • Less than half of these individuals will go on to be that person

One of the main reasons we have this disconnect is due to the misconceptions we mentioned at the start of the conversation—queries and concerns such as:

Am I Too Young?

No—the earlier you start, the lower your premiums.

Am I Too Old?

No—now will always be the right time to start, regardless.

Can I Just Save the Money?

Yes. However, if something happens to you halfway through your savings goal, you’ll fall short.

Insurance Is a Fraud!

This is by far one of my favorites, once put into perspective. The price of insuring your life costs less than your car and your home. Further, it’s more expensive to upgrade your iPhone—to virtually the same phone as the last one that just looks a bit different (you know the ones). This sounds like more of a swindle to me!

At the end of the day, proactivity is key when it comes to taking care of your life and your loved ones. For most of us, things won’t just land in our laps. What separates the normal working person from the elite can be linked to the choices we make today that shape our tomorrow. I’d love to chat about this further with you—you can use and apply the take-aways however you feel is best for yourself and your loved ones. After all, when it comes to insurance, you won’t know how much you need it until you need it.

Keishon Wilson is Senior Life and Pension Sales Advisor at Freisenbruch. To learn more about life insurance or if you have any other questions, please contact him at kwilson@fmgroup.bm, or call +1 441 535 6352, or +1 441 294 4616.

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