Life Insurance - Do you need it?
Several years ago, shortly after my husband and I had our first child, we wondered if we needed to have life insurance. It was something we had never thought about before, but obviously, when you have a child, it makes you think about things you’ve never thought about before. We decided to find out more and contacted an agent to get more information and to answer our questions.
So how do you know if you need life insurance?
If someone depends on you financially, you probably need it. A life insurance policy provides cash to your family after your death. This cash (known as the death benefit) replaces your income and can help your family meet many important financial needs like daily living expenses, mortgage payments and college savings.
To figure out if you need life insurance, think through the worst-case scenario for your family. If you died tomorrow, how would your loved ones survive financially? Think of all the expenses they would have, including funeral costs, medical bills, taxes, debts, etc. Would they be able to pay ongoing expenses such as mortgage, rent, automobile costs and maintenance, clothing, medical care, etc.? You will also have to plan and think about long term financial issues, such as college expenses and retirement savings.
Life insurance helps you make sure that the people you love will be provided for financially, even if you are not there to care for them yourself. Losing a loved one is difficult enough without having to think about possible financial difficulties. Whether you are young or old, married or single, have children or do not have children, take a moment to consider how life insurance might fit into your financial plans and how it can help in your planning for the future.
If you are married, life insurance will help your spouse make ends meet so that they will not have to depend on one income alone.
If you are a single parent, it is very important that you have life insurance. You carry so much responsibility day-to-day, so you need to ensure that your children’s financial future is secure.
If you are a stay-at-home parent, this doesn’t mean you don’t make contributions to your family. Child care, cooking, cleaning, transportation and other household activities are important tasks which are not valued enough by most people. If you must return to work after the death of your spouse, will you need to pay someone to help out with these tasks?
As you grow older, you may feel that the need for life insurance has passed. Your children are grown; your mortgage is paid off. However, you may not be able to depend on Social Security and your savings alone. You need to consider that your spouse may not be able to handle the daily living expenses they would be faced with. You should also consider if you want to pass something on to your children and grandchildren.
Most single people do not need life insurance because no one depends on them financially; however, there are exceptions. Some single people provide financial support for aging parents or siblings. Others may be carrying significant debt that they would not want to pass on to family members who survive them. If you are in a situation such as this, you should look into life insurance because you wouldn’t want your loved ones to be burdened financially in the event of your premature death.