Life Insurance Needs Assessment: Top 5 Reasons You Need Life Insurance
We are all guilty of procrastinating every now and then. Especially when it comes to the somewhat morbid topic of life insurance. We all know that our death is an inevitable fact. Something that makes it easier to think about and easier to handle is preparedness. Knowing that your family will be taken care of and that all of your affairs are in order financially can make the process that much easier. Losing a loved one is always a traumatic experience. Furthermore, having to immediately look at financial costs of the loss is heartbreaking. Many people think they can wait on getting a policy and that they won’t need it for a long time. If you are debating getting life insurance, this article will help you decide. We will guide you through a life insurance needs assessment.
#1: Are You the Breadwinner?
Step 1 of the life insurance needs assessment is knowing the value of preparation. It is a common misconception about financial planning is that you only have to worry if you make the majority of the money in your household. Certainly, if you are the main source of income to your family, an untimely death may be financially devastating to your family. However, if you are a key part of the family unit, such as a stay at home dad or mom, there is a financial burden linked to this as well. A single parent has to now look into child care, meal preparation, and child rearing services to help carry the family load. Make sure that both partners are looking into life insurance to offset an untimely loss.
2. How Owning a Home Affects Life Insurance Needs Assessment
Young people often think that they don’t need to worry about life insurance, because they don’t have kids or own a home. Indeed, owning a home will impact your life insurance need assessment. Still, even without it, early preparedness is always the best policy in my book. If you are thinking about your future and envision owning a home and having a family, then it is never too early to plan for life insurance. Take a look at your options and see what makes sense for your future. If you currently have a mortgage, then the time is now. There is nothing scarier than a family losing their home after losing a loved one.
3. Do You Have Aging Parents or Children?
Next, having dependents is a huge part of the life insurance needs assessment. Typically, young people think of children as the only dependent they could potentially have. However, depending on the situation you are in dependents can be parents as well. I have seen people have to dip into their own savings to take care of their elderly parents and even sick family members that rely on them for support. Having a backup plan will make sure that your family, regardless of age, will be taken care of. If you have children, it is imperative that you look into a life insurance policy. Luckily, most employers offer coverage for life insurance as it is such a common necessity.
4. Does Owning a Business Impact Life Insurance Needs?
Millennials are infamous for redefining the “side hustle” and what it means to be a business owner. It is now easier than ever to have a full time career and own a small business on the side. Websites like “etsy”, “squarespace” and “wix” have made it increasingly more accessible and convenient to own a profitable business at a younger age. If you own a business like this or even have your main source of income as a self owned operation it is time to purchase a life insurance policy. You should have full control of your company and say in the future of your operation. Life insurance can guarantee your wants and requirements of the profits and function of the business upon your passing.
5. Life Insurance Needs Assessment: Age and Health
I like to think of life insurance in the same way as retirement preparation. Experts recommend preparing for your financial future as soon as possible and making sure that you have financially secured your future. In the same way life insurance makes sure that you are prepared for whatever the future may hold. Make this commitment to yourself and your loved ones before it is too late. A lot of people make the mistake of trying to buy life insurance when they are terminally ill or older in age. Do not make that mistake, be prepared for anything.