Who Needs Life Insurance

by Gillian Markson | More from this Blogger

16 Jun 2006 07:47 AM

Or is the question who wouldn't........

We all recognize the importance of life insurance as we need to make sure our loved ones are financially secure when we pass on. Remember, protecting your dependents (all who rely on you for financial support) in the event of your untimely demise, is the main reason for life insurance. Some life insurance plans also have savings features. Life insurance does not need to be a part of every person's estate plan; however, it would be very useful for parents with young children and those supporting a spouse, disabled child or adult. Additionally life insurance can help resolve several other common estate planning problems. Here are some key points concerning what life insurance offers:

An immediate source of cash upon death

Insurance returns are a reliable source of cash to pay the deceased's debts, funeral expenses, and income or death taxes.

Minimizing death taxes When an insured person does not legally own his or her life insurance policy, the proceeds are excluded from the insured's taxable estate. This can significantly reduce death tax liability of the insured's estate. This would only benefit those whose estates are large enough to face death tax liability to begin with.

Avoiding Probate The proceeds of a life insurance policy are not subject to probate unless you name your estate as the beneficiary of the policy. If most of your property will avoid probate, there's usually little need for insurance for short-term expenses, unless you have no bank accounts, securities or other cash assets. While determining your Life Insurance needs you must ask yourself how many people depend on your current earning capacity over the long term. If "none," you probably would not need life insurance.

If you died suddenly, how much money would your dependents need, and for how long? From that a total, subtract the worth of property they would inherit from you and any amounts that will be available from public and any private insurance plans that already provide coverage.

What are you short term needs? Determine whether you need life insurance for those short-term needs. After you die, what is the expected time window before your property is turned over to your beneficiaries. By comparison, if the greater portion of your estate is transferred by will, and will be tied up in probate for what could be months, your beneficiaries may need that immediate source of ready cash insurance would provide.

It's as simple as deciding if you need life insurance, how much do you need

Learn about the different kinds of life insurance and determine which best fits your needs.

Weigh your options concerning the policies from different companies to cut costs and gain benefits.

The need for life insurance comes from the need to secure our family. If you care for your family's needs you will definitely consider life insurance.

Learn more about Gillian Markson

View Full Profile | More from this Blogger