Is Life Insurance Worth It?
Life insurance may not be an investment plan nor a savings plan, but it can still play a big role in peoples’ financial portfolios. Life insurance aims to protect the dependents of a person from financial difficulties should he die.
In life, financial obligations can stem from situations like getting married, getting divorced, having a baby, buying a house, sending a child to college, starting a business, taking care of a sick or aged parent, and many more. If a person is shouldering these responsibilities he must ensure that these obligations continue to be fulfilled even after his death. And if he has a family who depends on him for finances, then he is a perfect candidate for life insurance. Long-term and short-term financial responsibilities should be considered when a person is looking at life insurance. Below are some questions to consider:
Are there people who depend on you financially and for a long time?
If you should die, do these people have enough to take care of their needs and pay off your financial debts?
The next question would need more assessment of the short-term financial needs of the family of the deceased. You’d have to consider these factors:
You’d need time and money for inheritance procedures.
The availability of other liquid assets like bank accounts or stocks can reduce dependency on life insurance.
Having so much more non-liquid assets than liquid assets would increase your need for life insurance.
The amount of debts and taxes the person stands to owe after his death.
Businessmen must ensure there is enough cash flow in the business for his inheritors to maintain his business.
Life insurance seem to be a need for most people, given the considerations above. Of course, there can be other reasons for purchasing life insurance, and these can include a home mortgage, a sole proprietary business, or a retirement plan.
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