First, let’s talk about the purpose of life insurance . Upon the death of the owner, this money is tax-free cash that can replace income and helps with expenses. It can replace income and help with expenses such as a mortgage, funeral expenses and day-to-day living. If you have dependents, life insurance should be a part of your tax and estate planning.
It might be easier to look at who doesn’t need life insurance. If you have no dependents and no one counts on you for your income, then life insurance probably isn’t necessary. However, the obvious situations are if you’re married with children, married without children, a single parent, caretaker or retired, this is something you need to consider.
In the event of your death, your spouse will probably need the extra money to remain in the lifestyle you’ve both worked so hard to reach. If you add children to the equation, even if they’re grown, there could be some hardship caused to them by your death. If your spouse can’t maintain that current lifestyle without your income, will he or she have to depend on children to help sustain their daily activities? And younger children will definitely feel your loss, emotionally and financially.
What if you or your spouse is a stay-at-home parent? If that person passed away, who would cook, clean, or chauffeur the children? There would be a cost to find someone to take on those responsibilities. Even though that person currently does not bring money into the family, his or her involvement has a financial price tag, which needs to be considered.
On the other hand, if you’re a small business owner, life insurance can protect your business in a number of ways. Just think about it, what would happen to your small business if you or your partner suddenly died. Think of the hardship that would put on your business. It could possibly be the catalyst that would close the doors. With life insurance, it could provide funding to the existing owners to buy the company interests of the deceased owner. Those funds could also come in handy in replacing the position of the deceased owner, or even key employee. When purchasing the life insurance, there are also ways to structure it so that a buy-sell agreement can be funded.
If you’re single with no dependents, you may think that life insurance isn’t necessary, but think about it. Are your parents aging and have they planned for financial stability in their later years? Do you have a special-needs sibling? Are there plans in place for him or her when your parents are gone? You could get caught in a situation where you could accumulate a substantial amount of debt.
At Ron L. Reed and Associates, our mission is simple, “To be Clear, Concise and Conversational with our potential and current clients. Our values are People Respect, Opportunity, Passion, Excellence and Loyalty.” Give us a call or get an instant life insurance quote by filling out the form on the left.