How to Determine if You Need Life Insurance
You need life insurance if you think you will leave financial obligations behind when you die. Family obligations create financial obligations. Life insurance benefits can provide food and shelter for children and other dependents.
- Difficulty:
- Moderately Easy
Instructions
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1
Determine what financial obligations you will have when you die. Decide whether you want to provide for college education for your children.
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2
Realize that in two-income families, each partner should be insured.
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3
Understand that every obligation you assume should be offset by sufficient life insurance protection. Your insurance agent can help you determine the correct amount.
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4
Buy mortgage term insurance, which can pay off your mortgage in the event of your death.
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5
Buy short-term life insurance, which can be used to pay off auto loans.
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6
Make sure all business obligations are protected with adequate life insurance coverage.
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7
Realize that your final expenses can be covered by life insurance.
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8
Consider whether your survivors will be obligated to pay estate taxes.
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9
Understand that many financial planners suggest transferring part of an estate through life insurance.
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1
Tips & Warnings
If you're young and single - and free of obligations - you might want to wait before buying life insurance.
If you want to invest in whole life insurance - a policy that will return significant dividends and interest over your lifetime - you should buy it as early as possible to lock in rates.
