Why do I need Life Insurance?

Life insurance has been a key component of estate planning. It can be very useful for financial planning, especially for parents of young children and those who support a spouse or a disabled adult or child. Alternatively, life insurance does not need to be a part of every person's estate plan. For example, people who do not have minor children or financially strapped dependents may not need life insurance.

In addition to helping to supporting dependents, a life insurance policy can provide immediate cash at death to pay the deceased's debts, funeral expenses, and income or estate taxes. Below are some key considerations to help evaluate your life insurance needs.

• Dependents’ Self Sufficiency: If you have dependents that either unable or a long way from taking care of themselves financially, such as disabled or young children, a life insurance policy can provide piece of mind that your dependents will be cared for financially.
• Dependents’ Financial Needs: If you are currently supporting your dependents financially, such as paying college or graduate school tuition, it may make sense to ensure that this financial arrangement continues by purchasing a life insurance policy.
• Settling Personal Financial Obligations: You may have personal debts, such as a mortgage, healthcare expenses, or funeral expenses that you would like to take care of in the event of your death. A life insurance policy can provide a financial umbrella to settle these debts.
• Avoiding Probate and Estate Taxes: Depending on the size of your estate, naming your dependents as beneficiaries on your life insurance policy may help them to receive money sooner and better limit their tax liabilities, as compared to traditional estate transfers.

If you decide to purchase insurance, you should know exactly why you are buying it and choose the best type of policy to meet your needs. You should consider your financial situation and obligations when selecting the type and length of policy. Of course, you should buy no more than you need.