Do I need life insurance? Why? What kind? How much? Questions like these can keep people up at night, especially parents. The experienced life insurance lawyers at Boonswang Law provide answers that will help you sleep soundly.
Why Have Life Insurance?
The main purpose of life insurance is to provide financial support for your dependents if you die. It also helps pay unplanned end-of-life expenses, such as cremation or burial costs, funeral expenses, medical expenses, estate taxes and near-term debts.
A family’s financial support needs are specific to that family’s lifestyle and goals. People purchase life insurance to ensure there is enough money to:
- Make mortgage or rental payments for a certain number of years
- Pay off the mortgage
- Allow the remaining spouse to stay at home with the children
- Pay for child care so the remaining spouse can work outside the home
- Pay for children’s private school education
- Pay for children’s college
- Fund the remaining spouse’s retirement
- Provide living expenses for the family for a period of time after the death
- Pay off debts and taxes
Who Needs Life Insurance?
Anyone whose dependents would need money for items in the list above needs life insurance. If you have a spouse, children or other family members who depend on you for their financial well-being and would suffer financially if you no longer supported them, you should have life insurance.
A person’s insurance needs change over time. Single adults with no dependents do not really need life insurance. Similarly, retired adults with no dependent children are unlikely to need life insurance, if they have a satisfactory retirement plan. Adults in this category are more likely to need long-term care insurance than life insurance.
Married adults with no dependents other than their spouses may or may not feel they need life insurance. That decision is based on the earning capacity of each spouse, their existing financial portfolio and their physical and emotional health.
How Much Life Insurance Is Enough?
The amount of life insurance coverage a person should purchase depends on the financial needs of his or her dependents. What standard of living are your spouse and children used to? What standard of living do you want to plan for if you or your spouse dies? What other sources of income will be available to your dependents after your death? Life insurance should be enough to fill the gap between the financial resources that will be available to support your dependents after your death and the amount they will need to maintain a lifestyle that you and your spouse agree is important.
The other factor in determining how much life insurance you need is what you can afford. The more insurance you buy, the higher your premiums will be. Your age and health also determine the cost of insurance.
Life insurance lawyers, financial planners, and insurance agents are all resources for determining how much insurance you need. In addition, many insurance and financial planning websites have financial calculators to help you get started.
What Kind of Policy Should I Get?
As with determining how much insurance you need, the type of policy that will work best for you and your family is an individual determination based on the needs of your family and what you want to pay for insurance. Professionals who understand insurance can help you assess your needs and find the right policy.
Chad G. Boonswang helps clients assess their insurance needs. Contact him today for a free consultation about insurance to protect your family.