Insurance Maze Blog

Feb 4

Deciding To Buy Or Not Buy Life Insurance

Category: Life Insurance post

February 4, 2008

Some people consider a sound life insurance program a vital part of their financial planning, while others wouldn’t buy life insurance if it cost only 1 cent per thousand. That, of course, is a personal decision. There are some very important things to keep in mind when making the decision to buy or not buy life insurance.

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One Thing We All Need To Understand About Life Insurance

There is no other financial planning vehicle that can create an instant estate like life insurance.

Let’s assume for a moment that you are an “average American”:

Married
2 1/2 Kids
$ 150,000 Mortgage
2 Vehicles
Lot of credit card or other debt
Make $ 50,000 per year
$ 50,000 group life insurance where you work

Now let’s further assume that you are killed in an auto accident on the way home from work. What financial impact does your premature death have on your family?

Well, right up front, since you only had $50,000 in life insurance and you produced $50,000 in annual income, you left your family exactly one year’s income.

Would you be comfortable with that situation?

So, Why Do We Buy Life Insurance?

First of all, we buy life insurance to pay our final expenses which not only include a funeral service and all associated expenses, but final expenses may also include medical expenses not paid by health insurance, probate costs, attorney fees and other expenses involved in a person’s death.
We buy life insurance to guarantee that our family can maintain the standard of living we have worked so hard to establish for them.
We buy life insurance to guarantee that our kids have the right to choose further education beyond high school.
We buy life insurance to retire the mortgage.
We buy life insurance to pay off debt.
We buy life insurance to guarantee a continuing source of income for our family.
We buy life insurance to guarantee the continuation of our business without any interference from a deceased partner’s spouse or other relative.

So, whether you are thinking about buying term life insurance or permanent life insurance, please understand, there may be a need for both in your insurance program.

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