It is always said that a young or single person does not need a life insurance policy. After all, the main purpose of life insurance is to provide a cash payout to your dependents such as your spouse and children if you pass away. Thus, it seems logical to think that you do not need life insurance because you have no one dependent on your earnings.
However, there are definite times when a single person needs life insurance and the good news is, you are probably looking at a much smaller policy, which means this type of coverage can be cheaper than the average.
Here are 7 reasons why to consider life insurance if you’re flying solo.
Life insurance is also called Hibah (hiba’) in Arabic term.
1. You have debt and your loan has a guarantor.
If you have student loans, house mortgages, car loans, credit cards, or any other outstanding, these will become your guarantor’s responsibility when you pass away. Guarantors are usually your parents, siblings, relatives, and sometimes, best friends. Perhaps you are a joint debtor with your brother on a house mortgage. If you pass away, he would be responsible for the entire debt. The question is, can he make the monthly payments on his own?
Buying a life insurance policy and naming him as your beneficiary would give him enough funds to cover your share of the mortgage, or perhaps to pay off the entire debt.
2. You have people who depend on you.
This is important if you have ageing parents or disabled siblings who depend on you, or if there is anyone who counts on your income to make their ends meet, you almost certainly need some form of life insurance. You will need to figure out how much is the total funds you would want this person to have and also for how many years would they need it.
3. Your Health Issues
Is it possible that your health will deteriorate? How is your current lifestyle? Do you smoke or drink (beer, wine, or liquor) frequently? How is your diet? Does your family (i.e. parents) have a history of heart disease, diabetes, or any other inheritable health conditions?
If you’re likely to be diagnosed with any medical condition, get life insurance now. You may have trouble buying life insurance later when you are older, or when you become un-insurable especially when your health has begun to decline. The premium is low when you are young and healthy. But if you are diagnosed with medical conditions, it will be much more expensive due to loading, or the condition will be excluded from the coverage, or worst, your life insurance application will be declined (hence, un-insurable).
Remember, money does not buy insurance. Good health does. Money just pays for it.
4. You own a business.
In some cases, the financial institution may require you to have life insurance for business loan approvals. This is to ensure that they will get their money back if you passed away before the loan is fully paid off.
You may also want to consider life insurance when you have business partners. When you create a partnership, you should always have contractual provisions to keep the business going should one partner pass away. The life insurance payout can be paid directly to the company and the remaining partners can use the money to acquire the shares from your beneficiary if the beneficiary chooses not to get involved with the business. Vice versa, you will be able to acquire your “late” partner’s shares from his/her beneficiary and settle the share buyout using the life insurance payout.
A proper contractual provision or shareholder agreement needs to be mediated by a lawyer regarding the agreed share price during shares liquidation when one partner passes away.
5. You want to pay for your final expenses.
Do you know that a funeral can easily cost around RM 1,000 for hiring a gravedigger with a simple headstone, while a funeral with a wake may cost more than RM 15,000 (as per packages by Nirvana)? A potential five-figure price tag for a proper send-off is a big reason why single people need life insurance.
Without it, who will have to pay those costs for you?
6. You want to grow your wealth.
The new form of life insurance does not only benefit after death, but it can also benefit you while you are living. With permanent life insurance, you have an option to pay under a short term payment plan (5-10 years) and allow the plan’s investment-linked portion to grow its account value.
In comparison to savings in the banks, savings with a life insurance plan allows the premium to be waived when you include the ‘payor waiver’ rider, in which your annual/monthly contribution will be waived by the insurance company if you are total and permanently disabled, or diagnosed with any of the 45 advanced Critical Illnesses. This is how you can still reach the life insurance protection goals that you planned, even when you cannot afford them during your trying times.
7. You want to leave a legacy (via donation / infaq).
We believe that life here on Earth is temporary and we must do our best to initiate good deeds or ‘Pahala’ as much as possible before we leave. Thus, leaving a sum of money to a beloved school, religious organization, or charity association is another reason why single people would like to have life insurance.
This act of kindness can help someone to realize their dreams or help further a cause dear to your heart. You may not be able to donate so much when you are alive, but your life insurance cash payout can help to boost your donation amount.
On a final note
Chances are you fit somewhere on this list unless you have zero debt with a very significant amount of savings. With just a few ringgits a month and with the right beneficiaries, you can have peace of mind that if anything happens to you, your beneficiaries will be provided for.
If you would like to explore more about life insurance or Hibah Takaful, you may reach out to us via ‘Contact Us’ and we will get back to you within 1-2 working days.
