Do I Need Life Insurance?
The age-old question that many adults ask themselves as lifestyles change: Do I need life insurance? Many adults seem to ask this question after a major event has occurred in their life, i.e. bought a house, had a baby, etc. The answer is simple: you do not need to purchase life insurance, but your family needs you to purchase life insurance.

Purchasing life insurance is probably one of the most selfless acts you could do for your family.  If you work and provide an income, your family depends on that income. But what happens when you pass away? How will your family replace that income that they were so dependent on? How will they make their mortgage payments? How will they pay their bills? How will your spouse continue to contribute to your child’s education fund? The answer is life insurance.

The next question you will probably ask yourself is, how much life insurance will I need? It will depend on your situation. First and foremost, you should ensure that any debt you currently have is covered off by your life insurance proceeds. You do not want your family to have to worry about debt payments when your income is no longer available. Next, you should decide how long your family will need your income for. If your spouse also earns an income, then you may decide that they will need your income at least until your children are no longer dependent on you. See the example below.

Example: John and Sally are married and have 2 children. Their first child is 12 years old, and their second child is 10 years old. John and Sally both earn $50,000 per year and they have an outstanding mortgage balance of $150,000. They have no other debts to pay off. They cannot believe they have put off purchasing life insurance for this long and have decided to purchase a policy. They have decided that they will need the insurance for at least 10 years, based on their children’s age. Based on this information, John and Sally should purchase at least $650,000 on each of their lives ($50,000 x 10 years + $150,000).  The next decision they need to make is whether they want to purchase permanent or term insurance (see “Term Insurance Vs. Permanent Insurance).

To conclude, while you may not need to buy life insurance, your spouse and children really need you to do so. You have helped to provide a certain lifestyle that they have become accustomed to, and without your income, that lifestyle may no longer be sustainable.

Article Written by: Mike Castagna