Conventional wisdom might be that everyone needs life insurance. Interestingly, the first form of life insurance was burial clubs back in ancient Rome.
In fact, a more appropriate name for this product might be “death” insurance. As you can imagine that name wouldn’t sell well. We all hope it a policy that is never used!
Just as with making any purchase, you should analyze IF you need life insurance before deciding to shop for it.
Demographics – What’s Your Situation?
Nearly everyone with dependents should have life insurance. We often think of dependents as being minor children. However, it is really anyone that’s dependent on you for support.
If you are gone, who will have a hard time replacing your salary or income? It may be spouses, disabled relatives or others. Stay at home parents with young children need insurance so the other parent could continue to work if the worst happened.
Final Expense Coverage
Older people often have a smaller life insurance policy to cover their burial costs. You may decide to be self-insured assuming the estate has more than enough cash to cover these expenses.
Business owners need to plan for the business continuation in the event of their death. Life insurance would provide surviving partners cash to aid in keeping the business going without you.
Insurance As an Investment?
Do not buy life insurance as an investment! The higher premium costs of policies with a cash value are not worth the return. You almost are guaranteed to make more money in other savings vehicles than non-term insurance policies.
Once the big expenses are paid off and the kids are grown, it may be time to let go of this type of insurance.
Next Steps on the Life insurance Process
If your assessment is that you should have life insurance, the research continues. You’ll need to shop for an insurance agent and compare policies among other decisions.
Thoughts on Deciding for or Against Life Insurance
We went through the evaluation and found life insurance isn’t needed at this point. Our family is grown and the mortgage nearly paid off. Have you evaluated whether you need life insurance?
Photo Credit: John Althouse Cohen