Life Insurance

Do You Need Life Insurance?

Why do you need Life Insurance?  Not everyone does need life insurance. 

You need to think about your current situation.  For example, if you own a home with your spouse and you pass away tomorrow, would you want to make sure your spouse has enough money to not worry about the mortgage payment?  What if you have kids—would you want to make sure there are some assets available for childcare while your spouse works in addition to having funds for the mortgage payment?  Another situation could be debt.  If the debt is not secured by an asset, then you will want to read the promissory note to see what happens.  For example, private student loans may not be forgiven at death.  These are things that you would think about when considering life insurance. 

The second step after determining if you may need some life insurance is to decide how long you may need it for.  For example, if you need it for making sure your kids get through college, for the mortgage term or a specific loan, then you may only need term insurance which is specified for a time period.  If you need some insurance to pay estate taxes, then you would be looking at whole life or second to die. 

The last step is figuring out the total amount you need and the best vehicles to get you there.  I recommend working with a professional so that you know what you are purchasing and how the policies work. I also do not believe in over insuring because the goal is to never use this.  

Other tips:

• Your insurance needs change over time due to many different factors-you should evaluate your needs and coverage regularly.
• Insurance costs increase as you age because you are older and typically you are not getting healthier as you age.  Also, you have more family history that may come into play.
• Really understand the type of policy and how it works before you purchase.
• Life Insurance proceeds are tax free.