Who Needs Life Insurance

You may feel like life insurance doesn’t pertain to you because of your situation in life, when in fact that couldn’t be further from the truth. Below are the circumstances that may pertain to you and good reasons as to why you should consider life insurance for you and your family.

Married:

Even with your surviving spouse’s income, would that be enough to pay off debts like credit card balances and car loans, let alone cover the monthly rent and utility bills?

Married With Kids:

Could your family continue their standard of living on your spouse’s income alone? Would their plans for the future–like college–stay intact?

Single Parent:

With so much responsibility resting on your shoulders, you need to make doubly sure that you have enough life insurance to safeguard your children’s financial future.

Stay-At-Home Parent:

Just because you don’t earn a salary doesn’t mean you don’t make a financial contribution to your family. Childcare, transportation, cleaning, cooking, and other household activities are all important tasks, the replacement value of which is often severely underestimated.

Grown Children:

Just because your kids are through college and the mortgage is paid off doesn’t necessarily mean you no longer need life insurance. If you died today, your spouse would still be faced with daily living expenses.

Retired:

Depending on the size of your estate, your heirs could be hit with an estate-tax payment of up to 45% after you die. The proceeds of a life insurance policy are payable immediately, allowing heirs to take care of these taxes, funeral costs and other debts without having to hastily liquidate other assets, often at a fraction of their true value.

Small-Business Owner:

Besides taking care of your family, life insurance can also protect your business. What would happen to your business if you,one of your fellow owners or a key employee died tomorrow? Life insurance can help in a number of ways. You can protect your business through a buy-sell agreement, or key person insurance.

Single:

Most single people don’t need life insurance because no one depends on them financially. Things to take into consideration are your debt load, funeral expenses, and insurability.

How much insurance do I need?

Experts say you need 5 to 10 times your annual income in life insurance. In general, you should find your ideal life insurance policy amount by calculating your long-term financial obligations and then subtracting your assets. The remainder is the gap that life insurance will have to fill.

To find out your Life Insurance Coverage needs, these are the factors you need to consider:

Annual Income Replacement

The amount of annual income your beneficiaries would need upon your death.

Years Income is Needed

The number of years your beneficiaries would need an annual income stream upon your death.

Cash for Immediate Needs

Debts and Obligations

The amound needed to cover all final expenses upon your death. This includes funeral costs, medical expenses, probate fees, etc.

Total Available Funds

The total of savings, investments and other assets which may provide income for your family.

insurance quote

What type of insurance is right for you?

There are many kinds of life insurance, but generally fall into two categories: term insurance and permanent insurance:

Term Insurance

The most affordable type of insurance when initially purchased, is designed to meet temporary needs. It provides protection for a specific period of time (the “term”) and generally pays a benefit only if you die during that term. This type of insurance often makes sense when you have a need forc overage that will disappear at a specific point in time.
For instance, you may decide that you only need coverage until your children graduate from college or a particular debt is paid off, such as your mortgage.

Permanent Insurance

By contrast, provides lifelong protection. As long as you pay the premiums and no loans, withdrawals, or surrenders are taken, the full amount will be paid. Because it is designed to last a lifetime, permanent life insurance accumulates cash value and is priced for you to keep it over a long period of time.

The kind of coverage that’s right for you depends on your unique circumstances and financial goals. Often a combination of term and permanent insurance is the right solution.