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Do I Really Need Life Insurance
Author David Schneider | May 23,2007
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It may seem surprising that an intelligent adult would ask whether he or she really needs life insurance, but this query is far more common than is generally acknowledged. The reason for this is largely psychological, and not very hard to understand. How many of us relish the prospect of considering our final demise in close detail? Contemporary Western society, unlike many other cultures throughout history, goes to great lengths to keep the notion of death at arm's length, which has some unfortunate consequences. Primary among these is the tendency of many people to put off their life insurance needs until it's too late for the maximum benefit to be derived from it.
When applied to your individual situation, this holistic approach to life insurance will help to define whether you truly need life insurance. Obviously, it's important to consult with your family, friends and trusted associates before making any type of decision in this arena.
When managed properly, life insurance can be a powerful component of a solid financial formula. Along with other assets like investing and retirement planning, a good insurance policy can go a long way toward protecting the most important people in your life when they need it most.
It is widely understood that the primary purpose of life insurance is to provide monies to your family after you have passed away. You family will find these monies essential to paying the mortgage and meeting other bedrock household expenses. However, life insurance addresses more far-reaching priorities as well, including your children's education, ongoing medical bills and estate taxes.
In the absence of a comprehensive life insurance policy at the time of your death, your family might have no other option than to sell assets to pay outstanding bills. On top of meeting the demands of lenders, there's the government to worry about. Survivors without a good policy can find taxes highly problematic. The beneficiaries of life insurance, by contrast, pay no federal income tax on the funds they receive. With certain types of policies, not all earnings that gather over time are taxed until they are withdrawn.
A number of basic features define an individual who genuinely needs life insurance.
Among the most critical of these are the following: If you currently have a significant amount of assets, such a owning a business or extensive property holdings or securities. If you have dependent children, or have an aging parent who relies on you for support. If you are married with an unemployed spouse. If a serious goal of yours is to supplement your retirement savings.
Obviously, a large percentage of Americans meet some or all of these qualifications. If they should hold true for your current situation, it's time to consider the matter in depth. Once you get past the initial feelings of trepidation, the peace of mind that life insurance provide will reward you. |
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