Do I Really Need Life Insurance
When we talk about life insurance and try to make people aware of the need for it, the question often comes up, “why do I need life insurance?” This is a fair question. After all, there is already more than enough required insurance that we need to buy, why bother with an insurance product that is not mandated by the government or by a finance company?
It is true that hardly anyone is required to buy life insurance, but this does not make it any less important than other mandated products. The reason the government requires you to purchase auto insurance is to cover the risk of you hurting someone else and/or damaging someone else’s property in an auto accident. The reason a mortgage company wants you to buy homeowner’s insurance is so that they are protected if your house burns down.
Life insurance does not protect outsiders, it protects those closest to you. Without it, your loved ones could be left in a major financial hardship in the event of a worst-case scenario. Does your family count on your income to get by? Does your income help keep a roof over your heads, put food on the table, and pay your household bills? How would these expenses get covered if you were no longer around?
This is what life insurance is all about. With a life insurance policy in place, you can rest easy knowing that if anything ever happens to you, those you care about most will be taken care of. This type of insurance may not be a requirement, but isn’t it just as important to protect your loved ones and as it is to protect total strangers that you may cause damage to?
Reasons You may Need Life Insurance
If you are single, have no kids, no debts, and plenty of money in the bank to cover a funeral and burial, then life insurance may not be at the top of your list. However, if you have any obligations at all, then this is definitely an insurance product you should consider.
Here are some of the most important reasons to consider life insurance:
- Cover Final Expenses: Of course, the first thing your loved ones will have to pay for if you pass away is your funeral and burial. These expenses go up with each passing year, and you need to make sure to have enough insurance to cover this.
- Income Replacement: If you are the primary breadwinner in the family, or if your income is a major contributor to the household expenses, it is recommended by many experts that you have enough life insurance to replace your income at least until your last child turns 18.
- Debt Protection: If you are like many families, you might have a home mortgage, an auto loan or two, some unsecured credit card debt, and maybe a student loan. If you have enough insurance to pay off these debts, you can help ensure that your family is not saddled with them.
- Cover Children’s Education: Many parents want to make sure their kids have a good education without having to a rack up lots of student loan debt. If you want your kids to be able to pay for college, then this should also be accounted for with your life coverage.
- Pay Estate Taxes: This does not apply to most people as there is a very high federal estate tax exemption these days. However, if the value of your total estate exceeds this threshold, estate taxes can eat up a huge portion of the hard-earned wealth you want to pass on to the next generation. One way to relieve your heirs of this burden is to purchase enough life insurance to cover estate taxes.
- Buy a Partner’s Share of a Business: Another creative way life insurance can be used is to provide funds to buy out the interest (in a business) of a business partner who passes away.
How Much Life Insurance Do I Need?
There are numerous reasons you may need life insurance, and there are several kinds of policies available in the marketplace. The amount of coverage you need and the type of policy you should have will always depend on your specific circumstances. The best way to find out the answers to these questions is to seek the guidance of an independent insurance broker. Independent agents are experienced professionals who work with several of the top insurers in your area. And because they are not captive to any particular carrier, they can take an objective look at your situation and recommend the insurance product and coverage that best fits your needs and budget.