Do You Really Need Life Insurance? Yes—Here's Why

Planning your future is a must if you want to achieve financial security. With the help of various financial tools and solutions, such as a life insurance policy, you can achieve your goals and avoid devastating financial losses. You can also safeguard your family’s future if something happens to you.  

In this article, learn more about the importance of life insurance—why you should get a policy and what happens if you don’t have one. 

What is Life Insurance?

Life insurance is a contract between a policyholder and an insurance company that covers the policyholder’s life against mishaps that may result in their death.^[1] 

Depending on your needs, you can get added protection at an extra cost by enhancing your policy with riders. Some common insurance riders include accidental death and disability, critical illness, accelerated death benefits, waiver of premium, and income protection. 

If you die during the policy term, your beneficiaries will receive a death benefit. This refers to the policy’s face value or amount, which beneficiaries would receive according to the terms you and your chosen insurance company have agreed upon.

To keep the policy active, you must regularly pay your premiums on or before its due date. You can also pay the premium in a single upfront payment. 

Read more: Personal Accident Insurance: What is It and Where to Get One?

Importance of Life Insurance: 5 Reasons to Get a Policy ASAP 

Why is life insurance important in financial planning? While the main objective of purchasing a life insurance policy is to financially protect you from unexpected circumstances, it can also help accumulate wealth and preserve it. 

Here are reasons why you should get life insurance today: 

✅ It Protects Your Family 

The most important benefit of life insurance is how it can reduce risks in your financial plan.

For instance, does the thought of leaving your family behind should something happen to you cause great distress or anxiety? Life insurance coverage can put your fears to rest. If you’re the breadwinner, a policy can help ensure that your family will be taken care of financially, even if you’re no longer around. 

The payout they will receive in the event of your death can cover major expenses, such as debts, your children’s education, or your home mortgage. This makes it possible for them to meet all financial obligations, remain self-reliant, and continue enjoying their current lifestyle. 

Lastly, your family will be able to enjoy the wealth you accumulated over the years—it won’t be depleted by having to pay off debts and immediate expenses. 

For example, FWD's The One for Life has variants that provide death, accidental death, and critical illness benefits. Choose the life and health protection option you need.  

The one-year death benefit is renewable up to 99 years old, while the accidental death and critical illness benefit is renewable up to 79 years old. There's no premium increase after every five years if you renew your plan continuously after your current plan's end of term. 

✅ It Provides Financial Support for Critical Illnesses

Regardless of efforts to live a healthy lifestyle, everyone is vulnerable to critical illnesses. Such a diagnosis is devastating. The long, challenging, and expensive treatments can also severely impact your finances. 

However, with critical illness insurance, you have the financial support to pay for your treatment. It takes away worries over the medical bills, allowing you to focus on getting better. 

Consider FWD's Set for Health Critical Illness Insurance, which gives you 100% of the benefit amount if you get diagnosed with any of the 42 specified major critical illnesses.

If you get diagnosed with any of the 15 minor critical illnesses, you will also receive a minor critical illness benefit, which is 20% of the benefit amount. If you pass away, your beneficiaries will receive 100% of the death benefit.

But if you never make any major critical illness claim and your policy remains active until its expiry date, you get 100% of your total premiums paid.  

✅ It Can Help Build Your Wealth

Investment-linked insurance plans guarantee lifetime protection and increase the potential to earn higher returns. A portion of your premium payments is invested in stocks, mutual funds, and bonds, allowing you to achieve your financial goals faster. 

It builds cash value over time. You can then use it to add to your child’s college education fund or prepare your emergency or retirement fund. 

For example, you can enjoy life insurance coverage until 100 years old as you invest your money in diverse local and global funds with FWD's Set for Life Investment-Linked Insurance. You can buy it as a stand-alone plan or customize it to get the coverage you need. 

Read more: What is the Best VUL in the Philippines and How Does It Work?

✅ It’s a Wise Financial Decision 

It may not be a priority if you’re a young adult since you’re likely in good health and don’t have a spouse and kids who depend on you. But getting a life insurance policy early is a wise financial decision. 

Insurance rates tend to be lower when you’re younger and healthier, which can help you save on insurance payments throughout your lifetime. 

Life insurance is not only for married people with children. Getting a life insurance policy is crucial if you want to be financially protected for whatever life throws at you. 

✅ You Can Customize it to Your Needs 

As mentioned, a life insurance plan can provide additional protection when you purchase riders available to your insurance base plan. Depending on your needs, you can add critical illness protection, accidental disability or death, hospital and surgical care, or waiver of premium riders. 

Depending on your payment capabilities, you can also opt to pay for your insurance premium annually, semi-annually, quarterly, or monthly. 

Read more: Should You Get Life Insurance? Consider These 8 Factors

What Happens If You Don’t Get Life Insurance?

If you die or get diagnosed with a critical illness, your loved ones will have to foot the bill out of pocket. Without life insurance, they won’t receive an insurance payout, which means leaving them to shoulder all medical bills, final expenses, and other outstanding debts on top of their own expenses.

In short, it can cause great financial hardship for your loved ones and put their future at risk. 

What are the Limitations of Life Insurance?

The primary factors that determine your life insurance premium amount are age and medical history. When you purchase a life insurance policy later in life—i.e., when you’re more at risk of serious health issues—you'll be charged higher premiums.  

Moreover, the issue age of life insurance policies is generally only up to 65 to 70 years old. Also, the cost of premiums for people over 60 rises exponentially. 

Like any financial product, life insurance also has exclusions and hidden clauses. Before purchasing a policy, read and understand the terms and conditions, especially the inclusions, exclusions, and claims procedures. 

Is Life Insurance Worth It? 

To help you decide if life insurance is worth it, evaluate your budget, your family’s needs, and your financial goals. It’s a necessity if you don’t want to burden them with expenses or debts should you get diagnosed with a critical illness or die unexpectedly.  

Ultimately, it’s worth it if you prioritize your family’s financial future.

Related reading: Moneymax and FWD Life Insurance Empower Filipinos to Make Better Financial Decisions

Final Thoughts 

We all want to leave a legacy that will ensure our loved ones will live comfortably long after we leave this world. A life insurance policy can help you secure their future. It can also serve many other purposes, depending on the type of life insurance policy you choose. 

Now that you know the meaning and importance of life insurance, don’t waste time thinking about whether you need it. Compare the best life insurance in the Philippines now and choose a policy that addresses your needs and provides the right amount of coverage. 

Buying an insurance policy and filing a claim shouldn't be complicated, especially if you choose a trusted partner like FWD Insurance. Click the banner to learn more: 

DISCLAIMER: This article was created in partnership with FWD Philippines. While we are financially compensated for this collaboration, we ensure to maintain our editorial integrity to provide you with the best recommendations that can help you make smarter financial decisions.

Source: ^[1] Why Is Life Insurance Important? (Forbes Advisor, 2023)