Many people don’t think they need life insurance unless they provide heavily for a spouse and children. Even then, it’s often overlooked. But life insurance should be part of any comprehensive financial plan. Here are three reasons why you might need it.
Your family is blended: Life insurance can provide for the equal transfer of wealth among different family members when you or your spouse are divorced and remarried.
If you’re remarried, for example, life insurance can provide for your new spouse while your children inherit other assets, such as property or valuables. Similarly, you may have children from multiple unions, in which case life insurance can help you ensure that all of your children are provided for equally.
You will have end-of-life expenses: Most of us have various end-of-life expenses, and life insurance can create a reserve to pay those expenses upon your death.
For example, it can fund the tax liability of your estate when it’s inherited by your loved ones. It can also pay for medical bills and funeral arrangements. It can even provide much-needed daily liquidity for your loved ones if other assets, such as property, are hard to convert to cash.
You own a small business: If you own a small or family business, life insurance can provide for the ongoing survival of this company.
It can fund the sale or purchase of your business, for example, or it can provide for family members who won’t receive a share of the business when it’s handed over to someone else upon your demise.
Finally, remember that your life-insurance needs are likely to change over the course of your life as your personal and financial circumstances evolve. As a result, it’s important to check in regularly with an insurance agent to ensure that you’re properly covered for your current needs.
A good rule of thumb is to contact your agent once a year to review your needs. Make it a habit to get in touch at the beginning of each calendar year, or use your birthday as a cue to contact your agent.