Do I Need Life Insurance?

Dave recommends life insurance when an individual’s death would financially impact their family, either by loss of income or outstanding debts. Keep in mind, however, that getting out of debt does not eliminate the need for life insurance. You also need to consider whether or not your savings are enough to provide for your surviving spouse and/or children’s financial needs. If you are debt-free and have savings that can generate enough income to make sure your surviving spouse and/or children’s financial lifestyle remains the same in the event of your death, then you don’t typically have a need for life insurance.

Many times, people may have no debt and strong net worth, but their wealth is illiquid and does not provide an income, such as equity in a home. You want to make sure that the assets/savings that you have achieved are capable of generating income so that assets – such as a home – don’t have to be sold off out of necessity. If you are debt-free but still need to grow your savings, a 10-15-year term life policy may be the way to go, as it will allow you to grow your savings faster and the premium will be lower.

If you’re single, you may still need life insurance coverage depending on your level of debt and ability for your estate to pay off those debts when you die. Keep in mind that anything you aren’t able to pay off will become the responsibility of your family – and debt is a legacy no one wants to leave behind!

Read more about who needs term life insurance.