Life insurance is one of those taboo subjects for normal, casual or friendly conversation. Whenever people, however, develop a life threatening illness, have a close encounter with another vehicle on the highway, or otherwise find themselves in a situation where they are likely to be rated or declined by an insurance company, they suddenly develop a desire for a good life insurance policy. To give credit where credit is due, there are some thoughtfully disciplined people who give their portfolios regular review and make certain they have adequate coverage at all times.
I want so much for all people to think like the disciplined ones. In my career as a life insurance agent I bent backwards to persuade such people to keep their life insurance up to date. I have seen the difference between an adequately insured breadwinner at death, and one who barely had enough life insurance to bury him. The latter situation is quite painful to observe.
I, therefore, think it is imperative that everyone take the time to evaluate and understand what life insurance really can do. Ask yourself this question, "do I need life insurance and why do I need it."
If someone, be it your wife, your children or your business partner, depend on you in any way that can be seen as a financial dependency, then you do need life insurance. In the case of premature death your family will need money to pay your last expenses, like outstanding bills, funeral expenses, attorney's fees, medical bills and estate taxes. The businessman will need life insurance to fund a "buy sell" agreement, to pay off outstanding debt, or may be to keep the company afloat while they find a replacement for a deceased valuable employee.
I implore you to look at the following situations which will help you decide whether or not you need life insurance. So just try to relax and objectively as you can evaluate the situation for yourself.
One Parent Only Working
The most devastating situation occurs when one parent works and the other stays at home. Should the working parent die at a time when there are insufficient funds for the survivors to continue living in the manner to which they have become accustomed, then they may have to sell the house. The comforts which they had enjoyed for years would totally change. The minimal requirement is sufficient funds which would allow the survivors to adjust their lifestyle.
The ideal situation is to have sufficient funds which would allow the surviving parent not to work at all, during the formative years of the children. They can live in the same house, they can continue in the same school, and when the time comes to enter college, they go to the college of their choice.
A good insurance policy is an excellent tool that you can use to take care of these things.
Both Parents Working
In todays world, in most families, both parents work and share the expenses. If one parent should prematurely die, would the income earned by the surviving parent be sufficient for the family to live on? Probably not. In anticipation of that possibility a fund could be set up, through an Insurance policy, to replace, totally or in part, the deceased parents income.
Single Parent
In the case of a single parent, all the financial responsibilities for the family may lay on his or her shoulders. If that parents died while the children are still in school, how will the children survive?
Partnership Or Corporation
Let us look at the situation where you own your own business. You have one partner or several partners. One partner dies. Is it not fair that the surviving partners should own the business and the deceased partners family receive full value for his or her stock? Adequate Insurance coverage can take care of this eventuality also.
It may be desirable by all parties concerned that the beneficiary of the deceased partner become a full and active partner, if this is the situation then the funds can be used as a cushion while the new partner or shareholder learns the business and adjusts to his or her new role.
Key Employee
Some employees are difficult to replace. It may take some time to get a replacement up to the production level of your long time, well seasoned and highly efficient employee. If your business depends a great deal on a particular key employee, would it not be wise to insure that employee in case he or she should die suddenly? The company would receive the death benefit in this case, and the money would be used to keep the company afloat, while a replacement is found and trained.
