Necessities Of Life

Updated: 29 February 2024

What Does Necessities Of Life Mean?

The necessities of life refer to food, clothing, shelter, sleep, heat and any other basic need required to stay alive. Most of these items require money to obtain and are often insurable. For example, one can insure their shelter (home insurance), clothing (contents insurance), or health through an insurance policy.

In most circumstances, insurance companies provide coverage for necessities of life when a loss occurs. If a covered home is damaged in a fire, insurance will pay to rebuild the house and will usually reimburse the owner for anything extra they had to pay for shelter while displaced (i.e., hotel rooms). Life insurance provides the financial means for survivors to have the necessities of life after one dies.

To obtain these necessities of life, one must have a source of income. However, an income source can be also insured so that one still has the necessities of life even when unable to work. These insurance types include:

  • Disability insurance
  • Unemployment insurance
  • Long-term care
  • Life insurance

Likewise, disability insurance and worker’s compensation ensure a certain amount of income following disabling injuries or illness.

Insuranceopedia Explains Necessities Of Life

The necessities of life are at the bottom of Maslow’s hierarchy of needs, which describes the basic requirements needed to stay alive. Above these basic, physiological needs are safety needs such as financial security and physical safety. Financial security can be protected by insurance as well. The needs above basic survival levels are love needs (having relationships with others), esteem needs (feeling accomplished) and self-actualization (achieving one’s full potential).

In legal discussions and agreements, the “necessities of life” are often cited as a requirement for a legal guardian to provide to a minor or person who cannot otherwise care for themselves independently.

When purchasing a life insurance plan, the amount of insurance purchased should at least cover the remaining loved ones’ necessities of life. This amount can be calculated by determining how much it currently costs one to provide for their family for the year. Include rent/mortgage, food, clothing, medication, etc. Then, multiply the total by 10 to 15. This means the amount would support the family for 10 to 15 years after the policyholder’s death (give or take a few years with inflation). Calculating life insurance requirements using this method is called a “needs-based approach.”

Life insurance should also be enough to cover funeral expenses so the survivors can use the rest of the money received from the policy for the necessities of life. Many do not consider the cost of a funeral and other expenses related to the cost of a loved one passing away. For example, the family may need to pay legal fees to transfer property titles. Every additional expense can take money away from the necessities of life.

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