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Q: Do I Need Life Insurance?

2011 April 19

Dave recommends life insurance when an individual or family have debts that cannot be paid from their current assets and/or if a wage earner was to die and there is a need to provide income for those financially reliant upon them. Otherwise he feels there are much smarter things that you could do with your money. Getting out of debt does notby itself eliminate the need for life insurance. You need to take into account the savings that you have attained, and if that amount is able to provide for your surviving spouse or children’s financial needs.  If you are debt free and have savings that can generate enough income to make sure your surviving spouse and/or children’s financial lifestyle remains the same in the event of your premature death, then you don’t typically have a need for life insurance.  Many times people may have no debt and strong net worth but their wealth is illiquid and does not provide an income, such as equity in a home.  You want to make sure that the assets/savings that you have achieved are capable of generating income so that assets such as a home don’t have to be sold off out of necessity instead of desire.  If you are still in need of growing your savings, but you are debt free, then a shorter term life policy may be the way to go, such as a 10 or 15 year plan, since you have the ability to grow your savings faster and the premium will be lower.

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