How to Decide If You Need Life Insurance

Deciding whether you need a life insurance policy means understanding the economic impact your death would have on others. For instance, though it may be the case that a single person who is not supporting anyone else might not need a great deal of life insurance, there still must be some way to pay funeral and burial expenses, which tend not to be covered by death benefits you would receive via social security. It's therefore important, even if you aren't supporting someone else, to consider at least a small amount of coverage that would pay for funeral expenses in the event of your death.

Difficulty: Easy

Instructions

1. Think about how your spouse and children are going to be financially affected by your death. First off, grieving can mean time off work, and counseling for spouse and/or children. A person's death can also dramatically alter the ability of the surviving spouse to pay rent/mortgage, buy groceries, save for children's college funds, or continue to maintain the same standard of living prior to the person's death.

2. Don't simply consider the economic impact of your death for a single year, look at the spouse and/or children's needs for at least five years past your death, possibly longer if your children are very young, to see how much will make your family comfortable and be able to go on without worrying over financial troubles.

3. Create reasonable estimates of what services might be required, plus the cost of funeral expenses to determine how much life insurance you will need. Housecleaning, childcare, transportation to and from school, and the like may all come at a heavy price if you're not there.

4. Now if your children are grown, you will still require a life insurance policy, especially to protect your spouse or the interests of children who might inherit your estate. Life insurance may be a way to help pay for funerals, to pay for capital gains taxes on property acquired, or to help settle debts so others can entirely inherit your estate without burden of debt. Children who are supporting elderly parents should also think how that support will be diminished, and probably need a life insurance policy too.

Tips & Warnings

• In short, if someone will be financially responsible for carrying out expenses in which you provided in life you will need life insurance.
• Also, if you don't want to leave a financial burden on your loved ones in the case of your death you will need life insurance.
• Don't take this lightly! Your family's future depends on it!

[Virtuous1]

on 12/2/2008 Informative article...5 stars