Do You Need to Buy Life Insurance?
Three Factors to Consider When Deciding if You Need to Buy Life Insurance
Life insurance is one of the most confusing types of insurance to buy. And more than that, we don't trust most of the people selling it, so if you want honest answers to help you find out if you need life insurance, please read on.
First, we'll cover what life insurance is: Life insurance is an insurance policy that you pay monthly or yearly for benefits that you receive upon your death. Because you'll be dead when the payoff comes, life insurance isn't really for you, it's mostly for your family or dependents. In essence, life is uncertain and insurance is a way to hedge against that. By buying insurance you pay now for future benefits. In that respect, it can also be seen as an investment.
The first thing to consider when deciding whether or not you need life insurance is your dependents. If you have people that depend and rely on your income, then you might need life insurance. If you don't have anyone that relies on your income, then you probably don't need life insurance.
If you have dependents that rely on you, the next question to ask is how much do they rely on you. If your children are young or disabled, it is more important that you purchase life insurance to provide for them if something happens to you.
The second thing to consider is your financial status. If you already have enough money saved to support your dependents, then you don't need life insurance. If you don't have any money saved, then you might need life insurance. If you are somewhere in between, you could consider a small policy or take your chances and invest the money you would otherwise put into the insurance policy. If you are a good saver then you are less likely to need life insurance, if you are not disciplined enough to save, then you might want a policy.
A third factor to consider when purchasing life insurance is to provide for all of the expenses that you will need at death. For example, you can buy a life insurance policy that will cover all of your expenses at death, including your debts, funeral expenses and estate taxes. Insurance is an easy way to get cash upon death rather than wait for your assets to go into probate and then be dispersed at a much later date.
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See Also: Other Retirement Advice