Who Needs Life Insurance?
Life insurance protects your family by replacing your lost income if you die prematurely. Some policies also accumulate cash and pay distributions during your lifetime. When purchasing life insurance, consider your individual circumstances, the standard of living you want for your dependents, and the assets that you want to protect.
In most cases, you need life insurance only if someone depends on you for support. The following can be used as a guide to determine if you need life insurance.
- Single people normally do not need life insurance unless they are single parents or support someone such as an elderly parent.
- Working couples without children or dependent parents usually do not need life insurance, particularly if the surviving spouse would make enough money to meet expenses and pay debts without exhausting savings.
- Families (including single-parent households) usually need life insurance because the children depend on the parent's income. The younger the children, the greater the need for life insurance.
- Older people whose children are grown and independent are less likely to need life insurance. A well-planned savings program should decrease the family's need for life insurance as wage earners approach retirement age.
- Life insurance is sometimes used to fund funeral arrangements. This need should be fully reviewed for the best funding source.