Life Insurance 101: Why do I need a life insurance policy?

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We all have our stories of the first car we ever owned. How it would not start on cold mornings or how it stalled on the highway after you made your last payment. Those old jalopies took us through college and first jobs. They gave rides to our friends as we packed ourselves like sardines heading to a wedding or  a function out of state. We quickly realized that having a car was not the luxury we had viewed it to be, but rather a necessity. Now the old clunkers are a thing of the past and most people have graduated to newer and more efficient cars.

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The average monthly payment for car insurance is approximately as of 2014 was $150.

The average monthly payment for renters insurance is $12 a month.

The average annual payment for home owners insurance is between $300-$1,000.  

The average number of people who have life insurance: 4 out of 10

As you can see from the numbers, we insure our cars, we insure our homes, but we do not insure the most important asset that drives those cars and lives in those homes, ourselves. Most people take comfort that they are part of a group plan through their employer, but they fail to realize that upon leaving that job, that policy is no longer in effect and in essence you are without insurance.

Let us take an example of a family of 4 whom we shall call the Joneses. A husband and a wife who are both nurses and each bring an annual income $65,000, so a combined monthly income of approximately $8,000 after taxes. They also have two children. They have a $2,500 mortgage payment, $300 in utilities, $300 going to a mjengo project back home, $300 in groceries, $300 in car insurance payments and another $300 going to miscellaneous monthly spending. They are also paying back their student loans that they incurred for their college education which is $500. Their total monthly expenses barring any unexpected expenses are $4,500. The rest of the money, $3,500 is socked away in savings, an IRA and a college fund for their two children.

In the event of death, we as an immigrant population are very good at giving support to those who have lost loved ones. On average, fundraisers during the days of mourning will usually net anywhere from $8,000-$20,000. This is then used to defray the funeral costs which cost anywhere from $10,000-$20,000 depending on the place of interment. That leaves the bereaved family with barely anything after we have all returned to our normal life routines. So in the case of our family, the Joneses, should any one of them pass away, that is a loss of income totalling $4,000. That  would leave the family with a $500 deficit in their expense budget forcing them to start digging into the money designated for their children’s college education and retirement. If the Joneses had put in their budget two life policies for $300,000 each for a total of $50 every month(remember, the earlier in life you get a policy, the cheaper it is), on the event that either of them died, there would be a policy payout of $300,000 tax free which would act as income replacement and a buffer for the loss of a second income.

I started this narrative with the story of our cars. We insure what we value. The old jalopies were worth just a liability policy, but the newer car parked in your driveway most probably has a comprehensive policy. Why then do we place so little value on our lives as not to insure them? The true candidates for death are not just the gravely ill in the hospital, but rather everyone who is breathing and alive, that means you and I. Life insurance is a safe, tax free way and inexpensive way of ensuring that your family and loved ones are taken care of on the event of your demise. The earlier you get a life insurance policy, the better it is for you in terms of rates. The older you get, the higher your monthly premiums will get. So there is no better time to take care of your tomorrow than today.

In our next segment, we shall be covering the different types of life insurance and their benefits to you.

Kairu Rebo,

Agent at Rebo Insurance Agency

For any questions or inquiries, feel free to contact me at:



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