Do you really need life insurance?

Life insurance is an emotional part of estate planning we might rather ignore. Many people feel the word “estate” is too large to encompass their assets. However, estate planning is a valuable process at any age or stage of life.

Even a single person will want to have a life insurance policy to cover outstanding debts and funeral expenses. By starting young, you only have to build on the foundation you’ve laid. –Michelle Ogborne

What is Life Insurance?

It is an investment in which you regularly deposit premium payments. When you die, your beneficiaries will receive the money in a lump sum or as payments over a period of time. You can designate how the money is used. Funeral expenses and future support of your spouse or children is customary.

The two types of life insurance include:

• Term – This is for a specific duration. It pays out if you die during the period of time covered by the policy.
• Whole life – This policy pays out whenever you die.

The cost of your insurance policy depends on a number of factors:

• Length of policy
• Age
• Health
• Lifestyle
• Alcohol consumption
• Smoking

Should I Buy Life Insurance?

The short answer is: probably. If you have a spouse or children at home, you want to protect them. If you die unexpectedly, you want their quality of life to remain as consistent as possible.

Here is an example of when you may not need it:

• If you are retired, your mortgage is paid off, and your children are self-sufficient and living on their own.

When You Need Life Insurance

Should something unexpected happen to you, is there enough money to support your family? Many families insure stay-at-home parents. The cost to pay for childcare, cleaning, meal preparation, shopping, and transportation is stunningly high.

In addition to the loss of a loved one, your survivors may face financial instability. Relocating to a modest dwelling and uprooting your kids from their schools and friends is not something anyone wants. Life insurance can help avoid that.

You May Need Life Insurance if You…

• Are a new family – Before you start a family, life insurance premiums may be at their lowest. With the right policy, those premium payments won’t rise.
• Are in business – Many people rely on you as a business owner or partner. You may want a life insurance policy to fulfill your business obligations.
• Are young and single – Some singles don’t want their grieving parents to pay for funeral expenses. Other young adults are financially contributing to their parents’ care. If something happened, their parents would be emotionally distraught and possibly destitute.
• Have a mortgage or debt – If your debt load is greater than your estate assets, your spouse or children could be responsible for them. Life insurance is one way to help pay off debts.
• Have insurance at work – If you lose your job, you lose your life insurance. If you change jobs, you lose the money you’ve invested in your work life insurance plan. It’s a good idea to have a backup life insurance policy.
• Want to build wealth – Your financial advisor may suggest insurance policies that will offer cash values. These types of insurance policies can serve as investments and offer low-interest loans later.

Bankrate’s experts created a guide that explains life insurance coverage and policy changes as the pandemic impacts the way that Americans assess mortality and financial preparedness. They also cover why it’s currently a good time to buy life insurance and what information you can expect to disclose when applying for a policy.

Ogborne Law Estate Planning Services

Insurance companies sell insurance, and they may tell you bigger is better. The legal professionals at Ogborne Law understand Arizona business law and estate planning. You’ll receive financial guidance customized for your situation. Life insurance may be part of your plan. Call or contact us to learn more.