Wednesday, June 3, 2009

Do I Need Life Insurance? - Q's to ask yourself!

Life insurance can play a very important role in the estate planning process. When we are planning an estate, we work with our clients and their other professional advisors, including their life insurance professionals and financial planners, to determine whether or not the client is fully covered, and whether the client could benefit from leveraging their life insurance to leave a legacy for their loved ones or to pay estate taxes.  The following questions may be helpful to you in deciding whether to purchase life insurance or in determining whether the policy you have is adequate for your loved ones' needs. 

Our firm does not sell insurance products - that is not our field of expertise.  If you think you and your family could benefit from life insurance, please contact a qualified life insurance professional in your area. 

How do I determine if I need life insurance?

To determine if you are a candidate for life insurance, ask yourself the following questions:
  • Do I have family members who rely on my income? (Consider what would happen to them if you were to suddenly die.)
  • If I do die suddenly, how much of my income will my family need to replace and for how long?
  • How much debt do I have that needs to be paid off in the event of my premature death?
  • How much money should I set aside for my children's college education?
  • What are my expected estate tax obligations and expenses at my death and my spouse's death?
  • Do I have a business partner who would rather not be in business with my spouse if I died?
  • Do I have expected retirement income that may better serve my spouse if I purchase life insurance rather than choosing one of the company's survivorship options?
  • Do I want to create an estate for my family or equalize my estate for estate tax purposes?
If any of these questions are applicable to you or your family, you should seek out a qualified life insurance professional and begin educating yourself about the need for life insurance planning.  It is also important to discuss the addition of life insurance with your estate planning professional who will be able to help you determine the best way for you to own the policy under your estate plan.

While not everyone needs life insurance, it is surprising how many people do not have enough information about life insurance to make an informed decision as to how it may be useful for them.

"Determining the Need for Life Insurance" is an excerpt from the book 21st Century Wealth, which is available online from

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