Quora Answer: Why Do I Need Life Insurance?

The following is my answer to a Quora question: “Why do I need life insurance?”

A life insurance policy is a financial instrument.  And like anything, it is a matter of whether you know how to use it, or you do not.  In general, the primary purpose of any life insurance policy is estate planning.  The average person has family and others who survive him, and he sets aside something so that he leaves a legacy for the living.  Even in the event that there are no benefactors, it is possible to leave money for a foundation or a cause so that our good name lives on long after we have passed.

Disability and critical illness plans pay out upon claim so that you are not a burden to others in your illness or incapacity.  Critical illness can bankrupt an entire family, because more than one breadwinner is often lost.  In addition to the claimant, it is conceivable that someone else in the family has to leave their job to take of you, even if temporarily.

Finally, medical insurance is a need in an age where medical inflation is in double digits.  You either have to be very wealthy, or deluded to not believe in the importance of a hospitalisation plan.