We spend money to buy something for the satisfaction of possessing it. But life insurance is a product we can’t see, can’t touch, and probably can’t enjoy it either in our lifetime. Why should we buy life insurance then?

Protect your wealth

This is the main reason people buy life insurance. Nobody likes to see his hard earned money all swept away in diseases related disaster. We work hard in our whole life to increase our economy value. There is no guarantee that we can enjoy a long life to realize our economy value. Only two things are certain: tax and death. When death arrive sooner that we thought, life insurance will be our wealth creation tool to instantly generate the cash we could have earned.

Show your love to your family

“We love because it’s the only true adventure.” – Nikki Giovanni

Love is indeed an adventure. Our life is an adventure too. It is full of risk. We can show our love in a thousand ways when we are still around. But when we die, how are we going to love our family? At least, life insurance can take care of our family’s financial well-being.

Show that you are a responsible person

Did you ever notice that most of the victims who died in road accidents didn’t buy life insurance? I can say most of them have none or buy only a tiny sum assured. An irresponsible person drives recklessly and carelessly almost all the time. If you are a responsible person, you will care for others. Certainly buying adequate life insurance shows that you are responsible and trustworthy to your spouse, your children, your parents and the one you love!

Our health is deteriorating everyday

Do you know anyone who is getting healthier everyday? By the time he is 100 years old, he is at the peak of his health condition. He can live on forever! Gosh, people are getting older and this is an undeniable and unstoppable fact. Our health is deteriorating every minute. We never know the exact time a disease will strike us. Fear of illnesses motivates people to buy life insurance.

Practice the habit of forced saving

When we face the shortage of cash, withdrawing money from our life insurance policy is always the last resort. In the fear of losing the life insurance policy, we are forced to make the regular premium payment. In the long term, life insurance is a great saving tool. It forces us to save for the future, and also for the unforeseen disaster.

Funding a trust

A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. People create maintenance trust to provide regular income for family. The cheapest way to fund a trust is using life insurance. The cost of premium is only a few percentage of the trust fund we intend to create. For instance, paying premium of $1000 annually is able to get a life insurance policy worth $100,000 for a person below age 30.

Funding a business operation

An employer takes out an insurance policy insuring against loss of profits arising from the death, sickness or injury of a key employee. The beneficiary is the employer. The life insurance policy bought is known as key-person insurance. The insurance payout will be used as emergency fund for business operations.

Funding Buy-sell agreement in partnership business or corporation

Every co-owned business needs a buy-sell agreement the moment the business is formed or as soon after that as possible. Every day that value is added to the business without a plan for future transition, it increases its financial risk. What happen if one of the partners decided or forced to exit the business? The most common triggering events are dispute, death, disability and retirement. Life insurance can be used to fund purchases of the deceased shares in the event of death.


A charitable trust is a trust established for charitable purposes. Charities may take the form of charitable trusts, companies or unincorporated associations. Some wealthy entrepreneur buys insurance to fund their charitable trust.

There are so many valid reasons you should buy a life insurance. If you don’t know how to determine whether your insurance coverage is adequate at this moment, contact me.

If you buy insurance other than the reasons stated above, please give me input through the comment column.


Personal finance author and trainer

    18 replies to "Top 10 reason to buy life insurance"

    • Sandy

      Hi kc,

      Thanks for the interesting article.

      I just need to know something :
      i’ve set up a family trust with trust fund from life insurance, is it a good idea?

      And we (me, husband and 2 kids age 9 and 5) have our own policies – investment link policies.
      so many policies that they cost near RM5k /month

      Can u tell me whether it’s crazy or it’s normal for a family?

      Anything i should be reviewing ?

      Thanks in advance!


      • KCLau

        Hi Sandy, that’s great to set up family trust especially when your children are minors.
        Insurance premium shouldn’t be too much, advisable less than 10% of your household income. If you earn RM50k a month, RM5k/month premium is reasonable.

    • Koay Han Keat

      Hi! I’m a fresh insirance agent! I need support and hope you guys can give me a chance to serve you! Check out more details with me and i will tell you more about insirance! Make a friend also when youre not interested with it. Cheers!


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    • kk

      I think this is somewhat BS…. there’s no need for life insurance…is worth the risk anyway

      • KK Tai

        Your statement showed most likely you are single and you not really care about your family. Life insurance is something precious(in monetary way & emotionally behind the scene) we left behind to those who care about us.
        Parents raise their children with lots of effort & money$$$, if one day their child pass away due to accident/illness, who will take care of them. What about those who are married with wife & children? Who will pay the car loan, who will pay for the school fees, who will support their living cost? Think about this…
        Why it is compulsory to have insurance when apply for housing loan? because if the breadwinner died, family left behind no need worry about that, and bank can prevent losses.

    • anjali_subra

      hi, i have a question about criticial illness and disability coverage? Assuming I never make a claim, at what point would I be able to get back the money invested plus the returns? All insurance agents says it’s like a savings but do I have to wait till the policy expires to get that savings? I would most likely be dead by then anyway. Also, do you have to continue premium payments till the policy expires or can you stop after a certain number of years? Please advise.

      • Thye

        Most of the plan designed nowadays is investment-link plan which there is investment value like unit trust. Part of the premium paid for the plan is allocated to the fund. The point of whether can u get back the money invested depend on your entry age and the market value on the time you want to withdraw. If in standard case, i.e age around 18-35, u may break even your premium paid and investment value at +/- 20year. normally the plan expire at your age of 99. Another point of to stop payment after several years of policy inforced also depend on the value in the plan. Let say you paid premium for 20years, you may opt to choose whether withdraw the bonus or stop paying premium whereby company will deduct your premium from your bonus. In another word means that you can not stop paying premium and get back money in the same time, you may only choose either one!

        • KH

          just to add, there are times it makes sense to just cancel the life policy and get back your ‘current value’

          e.g. policy coverage RM25k, premium RM1.8-2k per annum (insurer is 53-54 years old) have paid up for >15 years already. Current value is RM11-12k.

          maturity is 70 years (so need to pay another 15+ years) i.e. pay another RM1.8-2k per annum for 15-16 years > RM30k. End of the day, you pay close to RM2k a year, for RM12k (current value)+RM25k(insured value) + (RM5-15k future value) or total RM42-52k (net sum), but you’ll probably need to pay another RM30k to get it over 15 years…

          1) pay RM2k a year for RM25k coverage for the next 15 years (i.e. 12.5x multiple of premium or 8% of insured sum a year), for max RM52k (but would have paid out bout RM60k by then)

          2) take your RM11-12k now and save the RM2k a year (it’s only for an additional RM25k coverage, of which you already have close to 50% of it now)

          option 2 was what we took….

    • serchia

      To show I am responsible person i can buy PA insurance which is much more cheaper.
      I can purchase for 36 Critical Illness policy also. Why should i buy life insurance?
      Is any other death is not cause by accident or sickness?

      • Soon

        Dear Serchia,

        PA only covered death due to ACCIDENT only, that’s why it is cheap & yet have many exclusion.
        If sudden death due to illness or any other reason is not covered.
        Critical Illness policy not covered for DEATH.
        & how about death due to suicide? There is more causes beside accident or sickness.
        Life insurance can say covered ANY KIND of Death.
        Is it important to have Life insurance.

    • AskChong

      Very good list of why every working adult should buy life insurance.

    • kumaran a\l periasamy

      send me informasion 36 critical Illnesses and cost tratment in malaysia

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