By Cathy Pareto
Life insurance was initially designed to protect the income of families, particularly young families in the wealth accumulation phase, in the event of the head of household's death. Today, life insurance is used for many reasons, including wealth preservation and estate tax planning. (For background reading, see The History Of Insurance In America.)
Life insurance provides you with the opportunity to protect yourself and your family from personal risk exposures like repayment of debts after death, providing for a surviving spouse and children, fulfilling other economic goals (such as putting your kids through college), leaving a charitable legacy, paying for funeral expenses, etc. Life insurance protection is also important if you are a business owner or a key person in someone else's business, where your death (or your partner's death) might wreak financial havoc.
Life insurance is a great financial planning tool, but should never be thought of as a savings vehicle. In general, there are often far better places to hold and grow your money as you get older.
Who Needs It?
Not everybody needs life insurance. If you are single and have no dependents, it may not be worth the expense. If, however, you have anyone who financially depends on you (even partially), life insurance may be appropriate for you. When considering life insurance, the questions to ask yourself are this:
- Do I need life insurance?
- How much do I need?
- How long will I need it?
- What type of policy makes sense for me? (this will be answered in our next section)
Intro To Insurance: Types Of Life Insurance
Financial AdvisorLife insurance was initially designed to protect the income of families, particularly young families in the wealth accumulation phase, in the event of the head of household's death.
InsuranceUnless you have kids, it's easy to think you don't need life insurance Here are the reasons why you might– as well as which type and how much to get.
Financial AdvisorCovering the needs of the ones you would leave behind is not easy. But efforts to secure a life insurance policy outside of work should pay off.
InsuranceFind out the reasons why term life insurance may not be for everybody, and why you may want to avoid it in favor of a permanent life insurance policy.
InsuranceLearn how to determine the type of life insurance you need and use our calculator to find out how much coverage you should have.
InsuranceLearn how much - if any - insurance you really need.
InsuranceLife insurance needs will likely change over the client’s lifetime and again financial advisers can provide an objective sounding board.
RetirementHere's how to incorporate life insurance into a plan to ensure that you and your family have the smoothest possible transition into retirement.
RetirementThe answer depends on your sources of income, how much debt you carry and whether you have dependents who rely on you financially.