Life Insurance Necessary?

shutterstock_194149526Life insurance is an integral part of setting up your Estate Plan. A life insurance policy should always be a part of your Estate Plan if you have a spouse, children or other dependents who would struggle financially if you passed away. Although this isn’t something anyone likes to think about, planning for your dependents’ needs after your death is a responsible, caring thing to do.

If you are unmarried with no children under the age of 18, and do not have any other dependents, you may not require a life insurance policy, however, it is extremely important that everyone closely evaluates their need for life insurance. There are some easy questions that can help you determine if you need life insurance, and if so, which type is best for you.

The purpose of purchasing a life insurance policy is to provide your dependents (those who depend on you financially) with immediate financial assistance at the time of your death. This money will help with costs relating to your funeral, which can rise to surprisingly high levels. Your life insurance policy will also help your dependents pay off any debts that you may have at the time of your death. Additionally, life insurance can support your family for many years if you choose an appropriate policy with the right amount of coverage.

Here are some important things to consider regarding life insurance:

  • Do you have any people who depend directly on you for their living   expenses? This would include a spouse, minor children, minor step-children, disabled adult children, or other disabled adult that you may support.
  • Aside from a life insurance policy, do you have any other assets that your dependents will be able to use to meet their immediate financial needs? These assets may include investments, joint accounts and retirement accounts that are payable upon your death or a revocable living trust.
  • What kind of savings do you have? Again, be sure that any savings are kept in an account that is payable to a dependent upon your death. If you have little to no savings, a life insurance policy is a great way to protect your loved ones.
  • How much debt do you have? Things to ask yourself regarding your debt: Is it slowly decreasing or steadily rising? If your debt seems out of control, remember that your dependents will have to deal with it after your death. Life insurance will ensure that they don’t go bankrupt trying to settle your debts.
  • How much money do your dependents need each month to meet their financial needs? This figure will help you determine exactly how much coverage you’ll need in order to guarantee that your family will be ok.

Life insurance is no one’s favorite thing to talk or think about, but it is important that you do so. The stability and well-being of your family depends on you making the right decisions about their future now, while you still can.