Who Needs Life Insurance?

Life insurance for every stage...

•Married
•Married with children
•Single parent
•Stay-at-home parent
•Grown children
•Retired
•Small business owner
•Single

Chances are you will need life insurance, if your loved ones will suffer financially should you die. Life insurance provides money to your family after your death. This money (known as the death benefit) replaces your lost income and can help your family meet those important financial needs like funeral costs, daily living expenses and college funding. What's also important is there is no federal income tax on life insurance benefits.

Most people need life insurance. To figure out if you need life insurance, you need to think through the worst-case scenario. If you should died tomorrow, how would your loved ones survive financially?
Would they have the money to pay for your final expenses (e.g., funeral costs, medical bills, taxes, debts, lawyers' fees, etc.)? Would they be able to pay for their ongoing living expenses like the rent or mortgage, food, clothing, transportation costs, healthcare, etc? What about long-range financial goals? Without your contribution to the household, would your surviving spouse be able to save enough money to put the kids through college or retire comfortably?
The truth it is very difficult and emotional when you lose someone you love. But your emotional struggles don't need to be compounded by financial difficulties. Life insurance helps make sure that the people you love will be provided for financially, even if you're not there to care for them.
To help you understand how life insurance might apply to your personal situation, we've outlined a number of different scenarios below. So whether you're young or old, married or single, have children or don't, take a moment to consider how life insurance might fit into your financial plans.

Married
When you're married, you share everything with your spouse, including your financial obligations. Many people mistakenly believe that they don't need to think about life insurance until they have children. Not true. What happens should one of you where to die tomorrow? Even with the surviving spouse's income, would your spouse be able to pay off debts like credit-card balances and car loans, let alone cover the monthly rent or mortgage and utility bills. If you're planning to have children, you'll want to buy life insurance right away and not wait until the mom-to-be is pregnant. Some companies won't issue a policy to a woman during her pregnancy. Since health complications sometimes arise, they'll want to wait until after the baby is born to issue the policy. Buying insurance before a baby is on the way helps avoid this potential problem.

Married With Children
In these tough economic times, most families depend on two incomes to make ends meet today. If you should died suddenly, could your family maintain their standard of living on your spouse's income alone? The answer is generally probably not. Life insurance provides that your plans for your family’s future don't die when you do.

Single
Most single people don't need life insurance because no one depends on them financially. But there are exceptions. For instance, some single people provide financial support for aging parents or siblings. Others may be carrying significant debt that they wouldn't want to pass on to family members who survive them. Insurability is another reason to consider life insurance when you're single. If you’re young, healthy and have a good family health history, your insurability is at its peak and you’ll be rewarded with the best rates on life insurance. If you anticipate a need for life insurance down the road (e.g., you’re the marrying type) and you can fit the premiums into your budget, it might make sense to lock in coverage while you're young and single. Doing so can eliminate the worry of having to qualify for coverage when you’re older than and maybe not as healthy as you once were.

Single Parent
As a single parent and caregiver to your child or children, you're the sole income provider, cook, chauffeur, and so much more. Yet nearly four in ten single parents have no life insurance whatsoever, and many with life insurance say they need more than they currently have. With all those responsibility resting on your shoulders, you need to make sure that you have enough life insurance to safeguard your children's financial future.

Parent
Just because you don't work in an office or for a big company doesn't mean you don't make a financial contribution to your family. Stay-at-Home Parents contribute so much more such as childcare, transportation, cleaning, cooking and other household activities are all important tasks to the well being of your family, the replacement value of which is often severely underestimated. Surveys have estimated the value of a Stay-At –Home Parent is over $40,000 per year. Could your spouse afford to pay someone for these services? With life insurance, your family can afford to make the choice that best preserves their quality of life.

Grown Children
As the years go by, you may feel your need for life insurance has passed. But just because the kids are through college and your mortgage maybe paid off doesn't necessarily mean that Social Security and your retirement savings will take care of whatever lies ahead. If you died today, your spouse will still be faced with daily living expenses. What if your spouse outlives you by 10, or even 30 years, which is certainly possible today? Would your financial plan, without life insurance, enable your spouse to maintain the lifestyle you worked so hard to achieve? And would you be able to pass on something to your children or grandchildren?

Retired
Did you know that depending on the size of your estate, your heirs could be hit with a large estate tax payment after you die (45% of your estate)? The proceeds of a life insurance policy are payable immediately, allowing your heirs to take care of estate taxes, funeral costs, and other debts without having to hastily sale other assets, often at a fraction of their true value. And life insurance proceeds are generally income tax free and can be arranged to avoid probate. Finally, if your insurance program is properly structured, the proceeds from your life insurance policy won't add to your estate tax liability.

Small Business Owner
Besides taking care of your family, life insurance can also protect your business. What would happen to your business if you, one of your fellow owners, or perhaps a key employee, died tomorrow? Life insurance can help in a number of ways. For instance, a life insurance policy can be structured to fund a "buy-sell" agreement. This would ensure that the remaining business owners have the funds to buy the company interests of a deceased owner at a previously agreed upon price. That way, the owners can continue the business and the family gets the money. To protect a business in case of the death of a key employee, "key person insurance," payable to the company, provides the owners with the financial flexibility needed to either hire a replacement or work out an alternative arrangement.