Do I Really Need Life Insurance?

We'll all die at some point, preferrably later than sooner. How you leave your loved ones financially can be up to you. As a retired insurance agent with an LUTC (Life Underwriting Training Council) designation, I have provided life insurance coverage to hundreds of families. Most everyone should have some form of it if only a small $10,000 burial policy.

Life insurance is not the most pleasant topic of discussion, but one that should be addressed in any family or business planning. Some people don't need or want life insurance. You will have to take your own situation into account and discuss with your family any of their concerns. You may decide to forego coverage depending on your financial status.

You don't really need life insurance if:

1) You are independently wealthy, have a large estate and more than enough to cover final expenses, debts and continuation of income for your family.

You DO need life insurance if:

1) You're young and just starting out in married life with no real assets. A life insurance policy creates an instant estate where none existed. This can mean the difference between your family losing everything, or being able to carry on financially if something happens to you. Since two income families are the norm now, both spouses need coverage. The free life insurance offered in many companies for their employees is usually not enough to cover a families expenses for more than a year or so. You also lose that policy if you switch jobs and will usually have to wait sixty to ninety days at the new company for new coverage to begin, creating a coverage gap.

2) You're self-employed with a large overhead and debt. Having a personal policy to cover final expenses and other business expenses entailed in closing or transferring that business will let your family sleep easier at night knowing that there would be no catastrophic change in their lifestyle.

There are many insurance plans that can be tailored to your needs by any life insurance company. You can get relatively cheap "term" coverage (a stated amount of years' coverage) or "whole life" that you keep, well, your whole life with no loss of coverage. Whole life is more expensive, especially if the coverage remains the same. With whole life you do usually get the advantage of a cash value above and beyond the face value. The returns vary widely from policy to policy and company to company.

You can make it an easier decision if you:

1) Talk to your spouse and family. Discuss their concerns.

2) Get educated. Talk to different companies and an agent you can trust. It's a jungle out there in terms of what's available and the premium charges.

Deciding on life insurance coverage is an unpleasant fact of life right along with drawing up a will. Knowing what you need is the first step in deciding what kind of future you want for your family.