Life insurance is often viewed as a way to protect loved ones by providing final expenses, real estate taxes, etc. But let’s think beyond that. Who else depends on you and your income?
“One size fits all” can apply to many things, but not to something as important as life insurance. Why you need it and how much you need it depends on your obligations and priorities. Your concerns are probably different from those of your neighbors or friends.
Since life insurance can have a huge impact on both your loved ones and your finances, this topic can be intimidating. To make it easier for you to determine your life insurance needs, here are four starting points to think about.
Who do you want to protect?
Life insurance is often thought of as a way to protect loved ones by providing final expenses, real estate taxes, etc. But let’s think beyond that. Who else depends on you and your income?
Do you have small children at home? Life insurance can help provide money for daycare now and an education for the future. If your children are older, your insurance can help cover tuition payments.
Are you responsible for your parents? If you are contributing to the care of an elderly relative, you should consider how health care bills will be paid if you or your partner dies suddenly.
-1 What do you want to protect?
If you have a mortgage, adequate life insurance can help your family stay in the home and maintain their standard of living.
Even if you don’t have a mortgage, there are probably other assets you want to protect. Life insurance can help your family keep up with car payments or protect your spouse from having to use retirement funds earlier than anticipated.
If you are a business owner, life insurance can help the company you formed continue after you are gone.
-2 Do you want to leave something behind?
Perhaps you would like your legacy to help the next generation to live more comfortably. Life insurance can help you do that.
Life insurance can continue with your contributions to your favorite charitable organization, because some policies allow you to name one organization as your beneficiary.
What is your personal financial plan?
So far, we have focused on what life insurance provides after your death. But did you know that permanent life insurance policies can earn cash value  that you can use during your lifetime? Many people like to know that they have access to living benefits, as needed, through credits and withdrawals. So it is fruitful to think about your finances in their entirety when considering the benefits of life insurance.