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Life InsuranceThere are generally three prime reasons why a person gets life insurance: 1) pay final expenses (burial and funeral, medical expenses, etc.); 2) provide retirement income for themselves; and 3) pass on wealth to loved ones after they pass away.  Additionally, life insurance can be a large factor in estate planning, charitable giving, and even business plans.

A straight-forward way to help you figure out if you need life insurance or not is to ask yourself what would happen to your family if you happened to pass away today.  Would they be able to afford funeral expenses?  What about living expenses afterward?  Are your parents aging, and do they need some help?  Do you have family members with special needs?  Are there others who depend on you financially?

Six Stages of Life When You Need Life Insurance

Young Single Adults

Most young single adults do not have others who are reliant on them for income.  In that case, you may only need a small life insurance policy to help cover any final expenses or debt so that your family does not assume that burden.  If, however, you help take care of someone, life insurance can help replace the financial support that you provided.

One important factor to remember is that your life insurance premiums are based in part on your age and health, so the younger and healthier you are when you get life insurance, the cheaper it will be as your life moves forward into marriage, kids, and career.

Married with No Children

If you are married with no children, both you and your spouse are probably both working.  If one of you passed unexpectedly, you may not be prepared for living on just one income.  Life insurance can help make up that difference for a time until you are able to adjust your standard of living.  Again, the quality of your life insurance is impacted on your age and health, so it is a good idea to get life insurance when you are young and healthy before your family grows and you get more dependents.

Married with Dependent Children

As any parent knows, children are expensive.  Life insurance can help cover expenses like paying off a mortgage, paying for college, retirement planning, and get some additional income if one of you stays at home with the kids.  If one parent stays at home, and that parent passes away, life insurance can help pay for child-care help in whatever form you decide is best.  Even though many couples have life insurance on the working spouse, having a policy on the stay-at-home parent is also highly advisable.

Single Parents

The situation of being a single parent is similar to being married with children-at least regarding life insurance.  However, life insurance is probably even more important here because your children are wholly dependent on your income for income and security.

Business Owners

Buy-sell agreements are popular among business co-owners.  These are often “funded” with a life insurance policy so that if one co-owner passes, the surviving owner can use those proceeds to buy the remainder of the business from the co-owners family.

A business can also get “key man” insurance on an individual whose skills and job description are especially important for the business.  This insurance provides the business with needed income until the business can find a replacement for that individual after he or she passes.

Business owners can also use life insurance for normal estate planning goals such as passing on wealth to descendants.

Empty Nesters and Retirees

Life insurance can help you have retirement income that helps you have the standard of living that you desire.  You can also get long-term care insurance that helps cover any expenses associated with any long-term medical or residential needs.  At this stage of life, you probably also have a good idea of where you are financially and whether you can afford to make charitable donations, begin a foundation or charitable organization, or provide a trust for your future generations.  For those in this situation, you can also use a life insurance policy to pay any estate taxes after you pass.

Final Thoughts

If you believe that you may need life insurance, contact The Rains Law Firm or schedule a meeting, and we will together to find a life insurance agent that you can work with and to coordinate your life insurance with a proper estate plan.