The main reasons most people have life insurance are to pay
final expenses (medical, funeral, burial, etc.), replace an income stream
and/or create wealth for our dependents after we die. Life insurance can also
play an important role in business, estate planning and charitable giving.
you need life insurance, think about what would happen to your loved ones if
you should die today. Most people would agree if you have children (babies
through college age) you need life insurance, but those who depend on us
financially may also include our spouse, aging parents, siblings, and other
family members with special needs.
insurance can be useful at various stages in our lives.
you have no dependents, you may only need enough life insurance to pay your
final expenses and debt so your family will not have that burden. However, if
you help support an elderly parent or another person, life insurance can
replace that financial support. Life insurance is much less expensive when you
are young and healthy, so if you anticipate getting married and having children
some day (and your budget allows for it), buying some life insurance now would
be a smart thing to do.
Children
At this point, both partners are probably working. If one
should die unexpectedly, one income may not be enough. Life insurance can
provide cash to pay final expenses, pay down credit cards and other loans, and
help with mortgage payments and ongoing monthly expenses—at least until the
survivor can make lifestyle adjustments. Again, if you are thinking
about having children in the future, it’s not too early to buy life insurance.
Children
Adding kids to the scenario multiplies our financial
obligations. In addition to final and regular ongoing expenses, life insurance
can pay off a mortgage, fund college educations and provide for the surviving
spouse’s retirement, easing the financial burden on the surviving parent and
even allowing a stay-at-home parent to remain at home with the children. If a
stay-at-home spouse should die while the children are young, life insurance can
provide the funds to hire someone to help with child care, shopping, cooking,
transportation, cleaning, and other household responsibilities. At this stage,
it makes sense to have life insurance on both
parents.
Single parents already have the work and responsibilities of
two people. Life insurance can provide the financial protection and security
your family would need.
Business partners often have buy-sell agreements that are funded with life insurance; when one dies, the proceeds can be used to buy the
other’s share of the business from the deceased owner’s family. “Key man”
insurance can be purchased on the life of an employee or partner whose role in
sales or management is very valuable to the business; if this person dies,
money would be available to help keep the business going while a replacement is
found. Life insurance can also create an inheritance for all children,
including those not working in the family business.
Retirees
Life insurance can help provide for the surviving spouse’s
retirement and potential medical and long-term care expenses. Existing and new
life insurance policies can also be used to make charitable gifts, and to fund
private foundations and trusts for future generations. Life insurance can also
pay estate taxes, preserving the rest of the estate for family members.
If you would like to discuss how life insurance should be considered as a part of estate planning, contact an estate planning lawyer near Menlo Park, California.
