Emergency Cash Fund

Who are among those who lapse their life insurance policies easily? 

From my experience, most of the lapsed policies are owned by young adults. My young adults customers are mostly at least having tertiary degree at local universities. I noticed that once they lost their jobs, they stopped their premiums immediately. However when I meet them for appointments, they are normally quite well-dressed and equipped with the latest phone.

My advise to these young adults would be to keep 6 months of emergency cash fund. This means to say that if you are out of job for 6 months, you still have this saving of emergency cash reserve to keep you through. This assumes when you lose your job, you will be able to get another one within 6 months time. You estimate how much you need to spend every month. Do not underestimate. Multiply this estimation with the number of months you think will get you back to a job.

As you get older and more fuzzy about jobs, you must keep more emergency cash fund.

Draw up a worksheet to record your daily expenses. At month end, you will know how much you require in a month. Remember to consider some expenses that recur once a year like your motor insurance, road tax renewal, land assessment, PA insurance and fire insurance.