What are the important things to look at for life insurance? Is it necessary to have one?

Hi anon,

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I think you first need to define 'life insurance'.

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I tend to think of it "Protection against X". X can be anything. It could be death, TPD, critical illness, hospital bills, long term aging, minor accidents, temporary occupational disability, etc.

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Going by your question, my most likely guess is that you are looking at protecting against premature death or TPD.

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In which case, ask yourself first if you need the coverage. If there is no one that suffers financially if you die prematurely, or no liability that will be passed on to others, then you probably don't need the coverage.

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But if you need the coverage, then consider

• The amount of coverage you need
• For how long
• How much will it cost (comparing across multiple insurers, since death/TPD is a pretty standard definition)
• Any other amount that you need to set aside to provide for others? (e.g. a husband may want to ensure that there is sufficient money not only to replace his lost income if he passes on, but also to allow for the wife to quit her job to look after the household, in which case we are looking practically replacing two persons' income)

The rest of the factors such as their underwriting limit is probably a minor factor in application as the limits are quite high and pegged to your age (the limits decrease as a multiple of your income with age). I've only ever had one case hit the underwriting limits so far. What is more important is your health. No amount of money can cover you if you are unhealthy and declined by the insurers.

Assuming by ‘life insurance’ you mean those that allows you to claim upon death, here are some aspects to consider (different if other insurance):

• your needs
• your situation (dependent or no)
• reputation, track record of insurer
• your health condition
• insurer underwriting limit
• tnc of the policy - exclusions, waiting period

On whether it’s necessary, it depends on whether you would like to have a sum of money left behind for your loved ones. Do they need any support after the unfortunate happened to you?

If you want you can check out my IG @richlifewithdavid where I share more on insurance, money mindset and money management hacks in general. DM me with more questions. Note I’m not an insurance agent / financial advisor :)