Do I Really Need Life Insurance in 2020?

Do I Really Need Life Insurance in 2020?

Did you know that your creditors are legally obliged to go after your assets like home, cars, businesses, and many more after you pass away? If you do not have sufficient assets, the burden of responsibility might fall on the shoulder of your spouse and children. Moreover, there is always this looming fear of how will your family manage to survive when you–the only breadwinner–is no more present to support them. This is where life insurance comes into play. 

What Is Life Insurance?

According to Wikipedia, Life Insurance is a contract between an insurance policyholder and an insurer wherein if and when an unexpected event like death or a life-altering injury was to happen, an insurer promises to pay a significant (pre-defined) sum to the family members of the policyholder. 

The terms and conditions may vary depending on the insurance company. Having said that, there are certain situations like war, suicide, or fraud where the policy gets nullified. This is why people, in 2020, are in doubt whether to go for the tried and tested Life Insurance policy or not.

Do I Need to Purchase a Life Insurance Policy in 2020?

In 2020, Life Insurance is as important as it has been over the years. If you have people depending on you, and you don’t have sufficient assets that can take care of them after you pass away, then it is crucial to purchase a Life Insurance policy. Also, keep in mind that a Life Insurance policy is not an investment for the future. It is a tried and tested strategy to manage risk. Plus, both parties, you and the insurer benefit in the long run. 

Plus, unlike other ways to support your dependents after you are gone, the money that your family receives is totally tax-free. They get to keep and use the entire sum without worrying about taxes or any other intermediary fee. There is no third party here. 

Furthermore, according to the latest report by the CPS Insurance Services, there are two significant regulatory changes affecting the Life Insurance industry in 2020. As a policyholder, you need to keep in mind that as of 1 January 2020, Principle-Based Reserving (PBR), and a 2017 Commissioners Standard Ordinary (CSO) table are going to be used. So, what are they and how do they affect your life insurance premiums and returns?

In a nutshell, a Principle-Based Reserving (PBR) is being implemented to aid the insurers to calculate the estimated total based on some new features and risk profiles. Parameters like Net Premium Reserve (NPR), Stochastic Reserve, and Deterministic Reserve will be taken into consideration while calculating the Minimum Reserve Calculation. 

Plus, Commissioners Standard Ordinary (CSO) table will help them calculate the minimum cash value based on the age of the policyholder. These metrics were used before as well, but some changes were proposed in the year 2017, which are being implemented now in 2020.  


Life Insurance policy is meant to support your family and immediate dependents if something unexpected was to happen in the future. You, a policyholder is supposed to either pay a monthly premium or a lump sum amount to the insurance company. The company will, in turn, take care of your family when you are not there form them. Hence, a Life Insurance policy is a good risk management strategy.