T

he long-awaited and much-delayed social security bill was eventually passed into law on Oct.28 last year. The endorsement of the Social Security Management Agency (BPJS) makes it the country'€™s first social security program representing universal health insurance coverage.

Those with a regular income will have to pay monthly premiums, while the government will pay premiums for individuals with little or no income and/or those who are unemployed.

This initiative is set to expand into the areas of life insurance, workers compensation, accident insurance, civil service pensions as well as retirement provisions.

Under this law, full unilateral insurance coverage will be afforded to the fiscally disadvantaged and working class.

So what'€™s the point you may be asking?

One of the most important financial-planning moves you can make is to purchase life insurance. Life insurance is about providing for your family after you'€™re gone. It'€™s about peace of mind and making sure your family is looked after.

When it comes to discussions around life insurance, disability insurance, and long-term healthcare insurance '€“most individuals are inclined to think '€œcost'€ instead of '€œcover'€. Here are some important factors to consider before simply choosing the least expensive offer on the table.

Depending on your individual and /or your family'€™s unique scenario, you should consider, term, permanent, universal, whole or some kind of life insurance protection. This coverage should be outside of the coverage you generally get through your company employment benefits as your employee benefits rarely cover your holistic requirements for cover.

While it is recommended all people have some type of policy to protect their families from the costs of settling an estate. There are some individuals in the following categories that should ensure they have a life insurance policy that will sufficiently cover the needs of those they leave behind.

Married couples; the surviving spouse in the marriage, even in a family without children will need resources to cover bills they have such as mortgages, credit cards, student loans and or any other debt. If your family happens to include children you will need to consider costs including but not restricted to, the future cost of university tuition, current schooling costs, day to day living costs of the family and any other costs associated with keeping your family at their current standard of living. Importantly, the time it takes to settle an estate often obligates the surviving dependants to long periods of fiscal hardship; it is therefore always prudent to make sure that the death benefit is paid directly to the beneficiary so that it will not be included in the estate.

Single parents will also need life insurance to ensure that those who depend on them do not suffer financially due to the death of their caregiver.

Here are some other critical decision factors to think about when purchasing adequate insurance;

Buy when you are healthy. Older people and those not in the best of health pay much higher rates for life insurance - so buy as early as you can, even the settlement of a single individual estate requires some money, the bigger the estate, the more money required.

Tell the truth. There is no sense in shading the facts on your application to get a lower rate. Be assured that if a large claim is made, the insurance company will investigate before paying.

Review your policy regularly.It'€™s also a good idea to revisit your insurance policy every few years. You may need to boost your coverage if you get a higher-paying job, bigger mortgage or have more children. A general rule of thumb is to buy eight to 10 times your income in cover. Go for the higher end if you'€™re the sole breadwinner with several young children; the lower end should be sufficient if both spouses work and you have older children, a smaller mortgage and a good start on college savings.

Last, we would like to think that we will be able to live life on our own terms until it is our time to go, but the reality is that two-thirds of people will actually need some type of long-term care, either in their homes or at a certain facility. It is therefore vital that we plan adequately for this type of expense. Some form of retirement annuity or long term care policy if purchased at the correct monthly fiscal quantum and maintained, will in most instances take care of your old age fiscal requirements.

In conclusion, while generally the perception is that economic times are easing, many people still struggle with the day to day cost of living, this often leads to a risky delay in the decision to purchase suitable cover. This type of procrastination can and might prove very expensive to your surviving dependants.

Even riskier is to be tempted into metaphorically crossing your fingers and hoping for the best, putting insurance on the '€œdeal with it later'€ list.

The risk of not having life insurance when it comes to estate planning is not just a risk that wealthy people face. Death benefits are normally tax-free or taxed at a nominal rate. The life insurance policy, however, as stated earlier, must be established structured and paid for properly.

There are a lot of factors to consider when purchasing insurance, but be certain to have all the facts before making a decision. As you can see, both buying insurance and not buying insurance comes at a price. Be sure you know what the costs are'€”short-term and long-term.

The writers are co-founders and managing partners of Avatar Global Consult Limited.