David was 35 years old, married with 3 children, aged 8,6 and 4. He worked as bank manager. His wife was an administrative executive before she had 2nd child. Rose chose to quit her job to take care of their 3 children. Both David and Rose were happy with the arrangement as the bank demanded long working hours. With one salary, David and Rose were frugal with their spending.
One day, David was involved in a car accident. He passed away on the same day.
Losing her husband, Rose was emotional sad and distraught. The children were afraid. Then came the funeral, medical bills, the housing loan, car loan and living expenses of the family. Rose felt alone facing the financial needs.
From this story, we understand that the emotional loss could not be compensated with monetary term. As for other monetary needs, if David left behind a life insurance sufficient to pay off the housing loan, car loan, funeral expenses, medical bills and at least 3 years living expenses for Rose to take some time to get back to her job, Rose would be very grateful. Even though physically her husband left her, he had taken care of a home, a car and the financial responsibility of a husband.
How much should David cover his life? He could add up all the outstanding loans, and based on affordability, at least 3 years of living expenses.
How long to cover? David did not have to buy whole life policy. Assuming all his children will attain tertiary education and be financial independant at the age of 25, David only needed to cover for 24 years assuming the loans had paid off at that time.
Buy term life is much practical than whole life. Premium is much cheaper.
We can see the importance of insurances in this story. I know Rose was emotionally burdened since her husband passed away, but I think she’s more worried about her three children and all the bills that she’ll be paying. I agree that David must have a policy that should cover at least three years for all the payments so that Rose can have the time to recover and look for a job. Well, I hope this story can serve as a lesson to those who are neglecting getting an insurance policy.
ReplyDelete-^ Elnora Cowger ^-