Like most insurance, Life Insurance is something we pay in order to avoid disastrous financial consequences. It can seem, however, like the money spent on Life Insurance just goes into the ether – without any realization of financial gain. One of the things that we hate the most is adding one more expense to the stack of bills we receive each month.

“So do I really NEED Life Insurance?”

Here are the TOP FIVE reasons why people buy Life Insurance. If any of these ring true for you, you may need Life Insurance too.
 

#1: Income Protection

Let’s face it – your income is what protects the quality of life for your loved ones. If your paycheck were removed from the picture, what would those loved ones have to maintain that same quality of life? What often happens without Life Insurance is that families end up drastically altering their lifestyle. Imagine your children having to shop at Goodwill instead of Gap, existing on food stamps instead of dining occasionally at restaurants, and having to spend more time alone at home while your spouse or significant other has to work even harder to make ends meet.
 

If you need Income Protection Life Insurance, a good way to measure how much you would need is to see how many years you have until the youngest child would be able to be financially responsible – then multiply your annual income times that number of years. If there are no children involved in the equation, you may want to look at how many years your spouse or significant other would have to exist without your financial help – then decide on how much money each year would be needed to take them to retirement.
 

#2: Debt

A majority of Americans have financial obligations due to debt. Many families are not able to meet those obligations without the full earning power of both spouses. Imagine again if one of those incomes were eliminated – would you be able to meet those same payments?
 

The unfortunate thing is that debt does not die when you do. While we’d all like to plan to pay debt off before death, but there are times when death catches up with us beforehand. At that moment, your debt is passed on to your family – and they must find a way to pay it off in your stead.

If debt is a reality for you, a Life Insurance plan should be too.
 

#3: Mortgage

A home is often the largest and most important purchase we make – but brings with it significant debt and responsibility. A mortgage is not just a financial responsibility to a bank, but it represents our responsibility to provide housing to our families. Without us in the picture, our families will still need to have a place to live.
 

Buying a Life Insurance policy for Mortgage Protection may not just be about paying off your current mortgage, however. In some cases, families find that the house they are in is unfeasible for the future. They may prefer to downsize or relocate to adjust to their new reality. It may be necessary to discuss these things with your spouse or significant other, and put together a contingency plan. Regardless of what you decide, Life Insurance is likely to play a pivotal role in providing housing for your family.
 

#4: Final Expenses

Mortuary and burial costs have continued to rise over time. It is estimated that funeral costs will exceed $20,000 by the year 2020. Arrangements can often be made with a funeral home in advance of death as to the services and burial plot, but many families elect to wait – as life has a way of changing our situations and locations.
 

Final Expenses may not end there, however. Many times, in the process of death, medical expenses arise that must still be paid. Deductibles, co-insurance costs, and other medical costs may still loom over the family and add to the grief that they go through.
 

If you have significant personal liquid assets, coverage for Final Expenses may not matter to you. If not, Life Insurance should probably be a consideration for you.
 

#5: Legacy Protection
 

For many families, the greatest feeling of achievement comes from providing opportunity to their children or grandchildren. As a parting gift, Life Insurance purchasers often plan to provide for the costs of higher education that would have been their responsibility if death had not occurred. If this is important to you, it may be necessary to look up the costs of the schools that your children or grandchildren would like to attend, and plan accordingly.
 

Legacy is not just about providing schooling, though. Many people have a church or other non-profit entity to which they have devoted a great deal of their time and resources. For some of these entities, the loss of a contributor could be significant and cause long-term financial difficulty. Most insurance carriers will allow you to set a church or non-profit as a Primary or Contingent Beneficiary. As a handy little side note, it is also important to mention that contributions to a 501(c)3 organization often defray the costs of estate tax scenarios (but you’ll need to talk to your tax advisor to see how this applies specifically to your situation).
 

So do you NEED Life Insurance?

If you answered “YES” to any of the five scenarios listed above, the answer is also likely “YES!”

So, then, how MUCH do you need? Go back through the fie topics, and come up with the amount that reflects your personal scenario. Add the total up, and that is the amount of Life Insurance you need.

There are three things to remember when looking at YOUR NUMBER.

#1: If you’re young, your number may be large.
 

This is not unusual – as younger people often have the most risk of dying young. For example, you may have a mortgage, larger amounts of debt, and a long time between now and the point at which your children would be able to take care of their own finances.
 

#2: Don’t assume that large Life Insurance needs means that you’ll have high costs.
 

The best part about having higher risk when you’re young is that your youth will also help you to get the lowest prices. On top of that, recent surveys found that the average person overestimates the costs of the policy they need by 67%.
 

#3: Don’t forget to plan ahead.
 

Just because you need a large amount of Life Insurance now, doesn’t mean that you’ll need that much later. For instance, if your youngest child is 2 years old, you may not need to purchase a 30-year plan. You may instead decide to purchase a 20-year plan – but make sure that you have the right to convert the plan to another term or to a whole life policy that meets your needs at that time.
 

And remember, you can schedule a time to review our quotes by CLICKING HERE.

We look forward to speaking with you soon!