Insurance Insights
July 29, 2021

Do I Need Life Insurance?

Safeguarding Your Future

Life insurance is something that most people consider once they learn about it, but many people don’t think too hard about it. A plan that pays out benefits after you pass on is a great thing to have. But despite many people believing that they don’t need a life insurance plan, having one would benefit almost all of them. There’s no one-size-fits all explainer for who does and doesn’t need life insurance, but there are a few key factors that make the decision easier. So, if you find yourself wondering “Do I need life insurance?” the answer might surprise you.

Who Needs Life Insurance?

It’s helpful to begin your decision-making process about life insurance by answering an important question: Would your passing financially affect your loved ones or dependents? If your answer is “yes”, then you should strongly consider life insurance. There are also a few general groups of people who often benefit from the right plan, such as:

  • Parents – If your children are minors or otherwise dependent on you financially, the right plan can help keep them afloat.
  • Spouses – Losing a spouse can make finances difficult, especially if the surviving spouse did not work. Life insurance can help them manage any shared expenses.
  • Students – Yes, even some students should consider life insurance, especially those with private student loan debt. That debt can be passed onto surviving family or heirs, so choosing the proper life insurance policy can help them pay those debts.
  • Caretakers – If you care for your aging parents or any other family members, having the right policy means they’ll be taken care of if you pass away before them.
  • Entrepreneurs – If you own your own business, certain policies allow you to name a business partner as your beneficiary. This allows them to either keep your business running without you or buy out any remaining shares.

Think About the Long Term

Every group listed above has one thing in common – dependents who would benefit in the long term from a good life insurance plan. They’re a key factor in determining whether life insurance makes sense for you or not. Consider the answers to the following questions:

  • How many people depend on your ability to earn money?
  • How much money will they need for living expenses when you’re gone?
  • Will they be able to become self-sufficient quickly or will it take longer?

Depending on how you answer, it can make the choice between having a plan or not all the easier. This information is also helpful in determining what type of plan you choose and how much you spend.

Don’t Forget the Short Term

After thinking long term, it’s time to think short term. Your assets and other property are some of the most important things to keep in mind when deciding on life insurance. After all, some of those assets may help take care of your dependent’s immediate needs when you’re gone. This is also as good a time as any to figure out your inheritance plan, as you’ll need to know how long it will take for your property to be disbursed. Pardee’s can help any client through this involved process and present the choices clearly, in a way they can understand and feel good about.

Choose the Right Type

At this stage, you should feel confident in your decision to choose a policy, now it’s a matter picking the right one. There are two forms of life insurance to consider: term and permanent. Term insurance is temporary and can last for a set number of years, while permanent insurance lasts for your entire life. If you don’t already have a plan, Pardee’s can help determine which type makes the most sense for your circumstances. Even if you have a work-provided plan, it may not be as robust as needed. Supplemental insurance (usually term plans) can help fill in the gaps in a cost-effective way.

The Best Amount of Coverage

When it comes to figuring out how much to invest in your life insurance coverage, there’s a helpful calculation that simplifies the process. Known as the DIME method, you add up your existing Debts, current Income, Mortgage, and Education expenses. The sum of those numbers will give you a good starting point to create a plan that adequately covers you and your dependents. At Pardee’s, we can help take all relevant client info and help you crunch the numbers to determine a policy that works for you.

Life insurance is a necessity for more of us than we realize. By taking the time to examine your options and how they apply to you, you can make an informed decision about building a plan. Pardee’s is ready to help any client decide between plans and help them craft a comprehensive policy that will keep their loved ones’ futures secure.

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