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August2018


Life Insurance – Liability or Asset?

More commonly people are looking at life insurance and basing the decision to buy or not on whether they are likely to claim. A mistake? Sometimes yes and sometimes no.

The problem is that when it comes to life insurance we don't have the advantage of foresight or hindsight.

When it comes to foresight we just don't know what medical or accidental thing may happen to us and when it might happen. Unfortunately if we don't have the right insurance cover or enough cover the impact of these events can be financially catastrophic and this leads me into hindsight.

Once an event has already happened to you, you don't have the opportunity to now go and insure that event. It's the same as not being able to insure a car once you've already crashed it.

So is life insurance a liability or an asset?

I believe it's an asset. The reason: we go through life working to enjoy life; to start and grow a family; to build assets; to have a holiday or two; to pay the mortgage. You get the picture.

The thing is it's getting more expensive to live, more expensive to raise a family. Everything is just getting more expensive. So you know what, we work harder for longer hours and have less time with our families.
In all this expense what happens if your greatest asset, your income, is taken away?

Compromise is the word that springs to mind, you will potentially compromise the decisions, financially and otherwise for the rest of your life while playing catch up.

So insurance is an asset if something happens to you medically or accidentally, you won't have to compromise in the future.

Ask yourself this, is an insurance premium more affordable with your current income than no income, and having your current and future life expenses?

Lastly, to present a balanced view. If you pay your premiums and go through life without a single claim then your life insurance has been a liability! But that would be said with hindsight and hindsight is not a luxury we have today.

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