Stripped down to its core, a life insurance provides your loved ones with cash after your death. This money can help your loved ones meet many important financial needs like your funeral costs, your children’s education, your spouse’s daily expenses and retirement plans, and much more. It gives ensures the people you care about the most will be provided for, even if you’re not there to care for them yourself.

The first question you need to ask yourself is whether you need a life insurance or not. To figure this out, you need to imagine the worst case scenario. What would happen to your loved one financially, were you to die tomorrow?

To help you answer this question, you will find here under a few common scenarios I come across regularly. So whether you’re in your 20s, a bit older, a bachelor, married , have children, or not, you will be able to make up your mind whether you need a life cover or not.

You’re Single
If you are single, you don’t really need a life insurance as no one depends on you financially. I only see three reasons for a single person to get a life insurance: (1) when you support your parents or siblings; (2) when you carry significant debt that you wouldn’t want to pass on to your family; (3) As you can guess, the best time to get insurance is when you don’t need it. And you need it least when you’re young, healthy and have a good family health history. So it can make sense to lock in coverage while you’re young and single, eliminating the risk of your not qualifying later in life because you’re older and not as healthy as you once were.

You’re a Couple
Many start thinking about getting a life cover when they get married. After all, once married you share everything with your spouse, including your finances. Therefore, it makes sense to protect your loved one should something happen to you, whether it is to make sure they can maintain their standard of life, or simply cover your debts (credit card, car loan, or mortgage). It also is a good idea to get a cover for the mother-to-be before she is pregnant as some companies don’t issue a policy to a woman during her pregnancy because of the potential health complications.

You’re a Family (Parents + Kids)
This is a no-brainer. Unless you are very wealthy, or your spouse family is, the only way to ensure your families well being is to get a life cover. And do not under-estimate the importance of getting a cover for your stay-at-home spouse. The replacement value of contributions such as child care, cooking, cleaning and other household activities are often underestimated. Think about your quality of life, or your partner’s, and get a cover for both of you.

You’re a Single Parent
If you don’t have a life cover as a single parents, go get one NOW! Your children’s financial future rest on your shoulder. What does happen if you’re not there anymore?

You’re Retired
Once retired, you don’t really need  a basic life cover *. Nevertheless, a life cover can still help your family as its proceeds are payable immediately, ensuring your beneficiaries can take care of funeral costs, and other debts without having to hastily liquidate your assets.

You’re a Small Business Owner
As a small business owner, you have one more reason to get a life cover. What would happen to your business if something happened to you tomorrow? Or maybe to your partner? Or a key employee? You got life cover options like a buy-sell agreement or a keyman insurance which can provide you with enough security and flexibility to help you get through these tough times.

At the end of the day, Life Insurance is the best way to ensure your loved ones well-being. Knowing when to get one, and why you get it, will help you define and optimize your estate planning. Now, did this post make you think about your current life cover? Do you plan to review it any time soon? If so, do you think I missed something here? Please feel free to react in the comment section here under.

* I am not discussing ILP cover and other schemes shielding your assets from the tax-man. I am focusing on simple, stripped down, life cover.

Your Risk Tolerance

Some may be afraid to invest; especially over uncertain times like presently; yet, studies have proved that investing is the best way to grow capital in the long run. To get started, you have to know what risk you are ready to take. You need to ask yourself what you want to achieve, and how comfortable you are with the potential value fluctuations of your investment. This will define your risk tolerance. To quickly define your risk tolerance, you can ask yourself the following questions:

• Your personality – Gambler or risk-averse?
• Your objectives – How critical to your well-being are your objectives?
• Your discipline – Can you stick to your plan in times of uncertainty?

Your Timeline is Everything

Knowing your risk tolerance is essential in defining what kind of investments you should go after. Yet, there is an even more important factor to consider once you defined your risk personality: your investment timeline. The shorter your timelines is, the less risk you should take.

For two or less years goals you should do your best to keep an easy access to your money. Keep it in cash; in a saving account or a fixed deposit. Your interest rate will be slightly higher; and you keep a clear control on your money. This is very secure.

For two to ten years goals you can start playing with your money a bit more. By having a few more years ahead you downplay your risk factor. Still, the market being what they are, you never know what the future may hold for your. Try to find a balance between easy-to-access investments and the stock market.

For longer than ten years goals you should really look into stock market; As long as you are not afraid of sticking to your plan over difficult times, you will enjoy good returns. In the long run, the stock market outplay all other passive investments.

Stock Market Kick-Start

The stock market can be quite frightening for a newcomer. Therefore, you should start with a few index-funds,managed by large investment houses. They help you kick-start your discovery process, while making sure you diversify your investment.

And should you really want to learn what the stock market is about, you should set aside a small sum to play with, and invest it yourself. By investing directly on the market you will discover what it really means to trade. You will experience the stress, and pleasures, associated with reviewing, selecting, and following your stocks. You may not outplay the market with your investments – yet you could surprise yourself – but you certainly will learn a few things on the way.