Who needs life insurance?

One of the most common questions I hear is “who needs life insurance?”  This is a great question which I will do my best to give you my opinion.  Life Insurance is one of those things that none of us like to think about, we are basically planning for our unexpected death.  We insure our homes, cars, and other valuable items we own.  Why wouldn’t we insure ourselves to protect our loved ones from bearing an even larger burden from our unexpected death?  As a veteran Firefighter/Paramedic, I’ve seen too often how people’s lives can be cut short unexpectedly due to illness, trauma, and other factors.

Most financial experts would consider life insurance to be the cornerstone of sound financial planning.  More than likely there are people in your life who depend on your CURRENT and FUTURE income, or they may depend on your time and effort that helps support your family.

You may be a money earning member of your family that helps pay the mortgage payment, car payment, and monthly bills, buy groceries, and put money away for future expenses such as college or retirement.   You are the prime example of someone who needs life insurance.  The loss of a loved one is extremely difficult, and the financial burden on your family if your income was no longer available would magnify the situation for years to come.

You may be a stay at home spouse who takes care of the house and children, and your contribution to the family is equally important to the family especially if you still have children in the house.  Your full time working partner will struggle to do all the things you do while working full time, and may need to hire people who are able to help while they continue to financially support the family. 

A single parent may be in a similar situation. They are the bread winner, mom, dad, caretaker, etc.  You are busting your tail to do everything you can for your children. Financially preparing for your unexpected loss should not be forgotten.  You would not want to pass debt on to your children, and I imagine that you would like your children to be able to have the same experiences as if you were here providing for them. 

Do you have a pension?  Many public safety employees and employees of larger companies are working towards retiring with a pension.  Many of these pension plans have options to choose a spouse as a beneficiary which typically will reduce your monthly payment significantly.  Depending on your personal pension, you may be a candidate to “insure the difference”.  This allows you to collect your full pension, using the difference to fund a life insurance policy which will pay out upon your death providing income to your family.  What if your spouse dies prior to you though?  This is one of the advantages of this plan, you are still collecting your maximum pension for the remainder of your life and your life Insurance policy will pay out to your adult children creating generational wealth for your family.  Don’t have adult children? Cash in your life insurance policy to use for the remainder of your retirement along with your full pension.  Instead of giving your earned money back into the pension, use it to build long term wealth.

Another reason people may consider life insurance is asset protection.  Individuals with higher earning incomes may be at risk for significant tax loss at death.  Life Insurance is received tax free by the beneficiary and is a great tool to be used to protect against the loss one’s family may incur at death due to taxes.

There are many other reasons people may need life insurance, and those mentioned above are a few of the most common I’ve seen.  Each individual and family is different and meeting with an insurance specialist you can trust is important.   I would love the opportunity to help you and your family plan for the future wisely.

Look for future blog posts about “How much Life Insurance is right for me” and “Term vs Whole Life Insurance.”  If you have any specific questions you would like to see a post about please message me directly.