Insurance

What does a 19 year old know about insurance?  Nil, is my conclusion.  To ask a young 19-year old guy who is still serving National Service (military conscription) to buy a Term Insurance, that will return nothing if nothing happens to him, is like asking him to flush his money down the toilet bowl.  It is utterly unfathomable.  Yet, a Term Insurance for the purpose of protection is the right answer.  There in lies the dilemma of a young
'investor'.

Pose the same question to a 40 year old, who has a much higher income and hence spending power, and he would probably have a far better appreciation and ability to accept and tolerate the scheme of things.  But alas, he could be fraught with all kinds of pre-existing medical conditions which makes him uninsurable!  Once again, darned!

The answer appears to be somewhere in between. 

My journey towards a sane investment started off precisely with the expectation of returns on any investment, while offering some protection.  My first policy was an insurance with $50,000 protection.  On hindsight, I now realise what folly!  What was my need for that $50,000 protection?

Many years later, with a protection level now at $750,000, and many many insurance policies later, I realised that my real need to protect my dependents (1 wife (definitely!) and 2 kids) should have been much higher, but alas, precisely, no longer insurable.

On hindsight, perhaps the right things to do would have been to start off with Term Insurance of $100,000 the moment one starts work, and to add another $100,000 every year thereafter, continuing to do so as protection needs increases over time, until an end target is reached.  The life events that would drive the increasing need for protection would be marriage, and the birth of each child.  On the flipside, decreasing needs would be death of spouse (*touch wood*), child started earning his own income, investment portfolio having outstripped protection needs.  The level of protection is to make up for shortfall in the investment/retirement portfolio while it is being built up. 

Are there other reasons?