A: “Do you already have life insurance?”
B: “Good gracious, no! I’m not dying yet!”
What’s wrong with this scenario? I can point at least three:
- Life insurance is not synonymous to death.
- Nobody knows when death will come, unless you have a terminal illness and are already too weak to stay out of a hospital bed. Still, even doctors will never be able to tell you with certainty, “You’re dying tomorrow.”
- And if indeed, you’re dying tomorrow, you’ll have a heck of a time purchasing life insurance.
What is life insurance?
Life insurance is intended to financially support a person’s dependents when he/she passes away. It is also a good source of cash to pay for the deceased’s financial obligations, funeral expenses, estate and income taxes.
Who needs life insurance?
Not everybody needs life insurance. Here are some guidelines to consider:
- Children generally do not need life insurance because no one depends on them for financial support.
- If you’re contemplating on starting a family, you need to purchase life insurance. Future children will be depending on you for financial support.
- If you already have a family depending on you and do not have life insurance, you need to purchase one immediately.
- Young and single adults with aging parents depending on them for support need to purchase life insurance.
- If you’re already in your twilight years, meaning above 60, and nobody depends on you for financial support, the only reason you might need life insurance is to pay for your funeral expenses. But keep in mind, purchasing life insurance at this age may be very costly. Another option is to go for a memorial plan. Ask your financial adviser for the better option.
- Working couples without children may or may not need life insurance. If the spouse left behind is bringing in income to adequately support his/her needs, life insurance may not be needed. Purchasing life insurance in this scenario may only be because the better half wants to put the significant other in a better financial position.
Perhaps the better question to ask yourself when considering life insurance is: If you died today without life insurance, will your family be able to sustain their lifestyle? If the answer is yes, you probably don’t need to concern yourself with life insurance.
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