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Who Needs Life Insurance
Life is our greatest value, the precious treasure we are given but once. Death is an irreversible loss which can and usually does affect our dearest and nearest deeply. In a situation of personal drama people may find themselves not only grief-laden, but also financially-stricken and absolutely unprepared to combat these hardships.
Normally we do not give much thought to our death coming unless we are seriously ill or well advanced in years. We keep pretending our game has no end. Difficult to accept, but confronting our death does not have to wait until we run out of life. The acceptance and awareness of our death can give our life clarity and encourage us to make special provisions for our relatives' future after we pass away. It is perfectly normal if such considerations prod you into thinking of how to lessen the burden of financial loss for your relatives after your death.
At this point let's look into the typical scenarios and conditions under which you may be interested in purchasing Life Insurance.
Life Insurance is, undoubtedly, a convenient financial tool to procure protection for people who depend on you and to safeguard your dearest and nearest after your death. If you are the bread-winner in the family or if your income makes up a substantial part of your overall family income, Life Insurance can replace your income and become a means of living for your family in case they lose you. Ask yourself some important questions which will help you determine whether you need Life Insurance. Can your family maintain the standard quality of life after you are no longer with them? Can they allow themselves not to think about such seemingly trivial but vitally important things as childcare, education for your children, transportation, domestic chores and many other daily living expenses? Researches show that on average it takes four or five years, possibly longer, to economically recover from the death of the bread-winner in the family. That is why one of the most important considerations to bear in mind when deciding whether you need Life Insurance or not is the financial status of the family and the distribution of income within the family. Purchasing a Life Insurance policy that best suits your needs and opportunities you can make an appreciable financial contribution to your family.
One more scenario stressing the potential importance of Life Insurance for you is also directly related to your family's financial stability. The family's financial situation may be aggravated if you are a work-at-home parent. Just think about the costs of replacing you and finding someone to do all the household chores and you will understand that Life Insurance can be a necessity.
A worse and more specific scenario is when you are diagnosed with a fatal disease. In this case it is perfectly reasonable to give a thorough consideration to available options and ensure your life. You will thus be able to spare your relatives a financial burden and to lay a solid foundation for your relatives' future without you, naming them as beneficiaries in your insurance program.
Life Insurance can be beneficial, even if you have no descendants, as it covers the funeral and burial costs, estate administration costs and medical expenses not covered under the health insurance policy. These expenses, one-off as they are, may turn into a heavy financial burden for your close people. Life Insurance can help provide immediate cash at the insured's death thus resolving financial difficulties.
If you are considering starting a family, it is reasonable to think about purchasing Life Insurance. You are not alone any more; there is someone who depends on you. If you want to secure the life of your spouse-to-be and your future children, it is high time to think about Life Insurance. An important point to keep in mind if you are considering buying Life Insurance when you think of starting a family of your own is that your insurance rates at this point will be lower.
Buying Life Insurance when you are young and healthy usually presupposes that you can get more coverage at a reasonable price. That is why do not put off till tomorrow what you can do today. It is also of a special note that if you are planning your retirement ahead, when you are still young, Life Insurance may appear a good means to provide for your retirement years if other financial resources are insufficient.
Conversely, purchasing Life Insurance at an old age may be excessively expensive and not necessary as your premium payments may turn out higher than the actual expenses which your family may be quite able to cover. Therefore, it is better to speak with your financial advisor first to determine other saving options that might help cover the funeral expenses.
If you are a single parent, you assume a great responsibility for your child or children and you cannot but think about a safe financial future for your descendants. In this situation Life Insurance is invaluable as it gives you a peace of mind because you know that your child or children will be protected should you pass away.
If you possess major assets that will provide an inheritance or will result in a high tax bill (e.g. you are liable to considerable taxes if you leave your estate to anyone other than your wife), Life Insurance is definitely for you as it can provide the funds to pay the taxes.
Besides taking care of your family, you may need Life Insurance if you want to protect your business. With an appropriate Life Insurance policy you may have the option that would ensure that the remaining business owners will be able to buy the company interests of the deceased's at a price previously agreed upon. Such a deal presupposes that the remaining owners will get the company and the family of the deceased will get the money. If you find this scenario suitable, you certainly need a Life Insurance policy providing this option.
You may also need Life Insurance if you want to accumulate your financial resources and create a source of savings. Permanent Life Insurance policies generally offer a special feature of building cash value. If the cash value is not paid out as a death benefit, it can be borrowed or withdrawn completely at any time you want. The cash value can be a convenient financial cushion for you as with it you can create your savings plan for the future. Of a great importance is the point stipulating that the interest credited this way is tax-deferred and it is absolutely tax-free if the money is paid out as a death benefit.
You may need Life Insurance if you are buying a house. It is one of the greatest and most expensive purchases one makes in life. But handling mortgage payments can be a lasting financial burden for you and your family. Purchasing a Life Insurance policy with a build-up of cash feature can help you put an end to your financial liability.
If we consider the categories of people who generally do not need Life Insurance, the first group to name is children. In most situations there is no need to purchase Life Insurance for children as they have no descendants depending on them. At the same time it is important to remember that the majority of cases may not reflect a particular situation and Life Insurance for a child may turn out to be a blessing. It must be your choice made with regard to your specific situation and financial opportunities. As general practice shows, if you want to protect your child or grandchild and to invest in your descendant's future, it is more effective to ensure yourself and make your offspring a beneficiary in your insurance program.
There is an opinion that your need for Life Insurance may lessen when your children are off the college and earn enough to provide their living, when your mortgage is paid off and you have no debts. It can be so, but one thing remains indisputable: for a caring person it is important to give a good thought to what might lie ahead and what difficulties his/her family might face in the future that would not let them maintain their usual lifestyle.
People who have no descendants may not need Life Insurance either. If there is no one depending on your earning capacity, there is no urgent need for Life Insurance. The same goes for single people. But again there are some exceptions you should be aware of. You may want to make sure your relatives will not incur your debts when you die. These may be student loans, or you may be tied up for years in court dealing with taxes, or you have to pay your mortgages and you do not want to pass it all on to your relatives in case of your premature death. In this case Life Insurance can be a convenient tool of financial planning. Or if you are single and have no descendants, you can provide financial support for other members of your family for whom it will be important. Thus you may want to help your aging parents, or put your siblings, your nieces and nephews through college.
All these categories of people and their specific conditions considered, it is natural if you take a look at the available options to protect the ones you love and to provide a relief from financial burdens for them.