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When someone will suffer financially when you die, you need life insurance because it provides cash to your family after your death.

This cash comes from the  death benefit, replaces your income and will help your family meet many financial needs like funeral costs, daily living expenses and college funding. What’s more, there is no federal income tax on life insurance benefits.

I have outlined a few scenarios below to help you understand.

Marriage,

Many people mistakenly believe that they don’t need to get life insurance until they have children. Not true. What it one of you died tomorrow? Even with your surviving spouse’s income, would that be enough 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 now instead of waiting until pregnancy—some companies won’t issue policies to pregnant women. Plus you're younger and healthier.

Marriage with kids,

Most families depend on two incomes to make ends meet. If you or your spouse died suddenly, could your family continue meet all their financial obligations—from paying rent or the mortgage to daily living expenses? Could your family continue their standard of living on yours or your  spouse’s income alone? Would their plans for the future—like college stay intact? Life insurance makes sure that your plans for the future don’t die when you do.

Even if you're stay at home parent,

Even if you don’t earn a salary doesn’t mean you don’t make a financial contribution to your family. Childcare, transportation, cleaning cooking, and other household activities are all important tasks, the replacement value of which is often severely underestimated. With life insurance, your family can afford to make the choice that best preserves their quality of life.


Even if you're single or retired,

Depending on the size of your estate, your heirs could be hit with an estate-tax payment of up to 45% when  you die. The proceeds of a life insurance policy are payable immediately, allowing heirs to take care of these taxes, funeral costs and other debts without having to hastily liquidate other assets, often at a fraction of their true value. Life insurance proceeds are also generally income tax free and won’t add to your estate tax liability, if properly structured. Most single people think they 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 a sibling with special needs. 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 will have a lower premium.

Posted 12:13 PM

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