Do You Need Life Insurance?

So one of the questions we get quite a bit
is whether or not somebody needs life insurance. The main purpose of life insurance is to create
financial flexibility for your beneficiaries. The biggest reason people get life insurance
is to create income replacement. So for example if you’re the primary breadwinner
and you have a spouse that doesn’t make as much or doesn’t work and you have minor children
and something happens to you, well then those life insurance proceeds are going to be able
to provide your spouse with the flexibility to make different choices she or he might
want to pay off the mortgage. They might want to make sure that kids college
can still be paid for. It’s really to ensure that flexibility is
available. Another reason people get life insurance is
to make sure there’s liquidity after you die to pay estate taxes. Currently the estate tax exclusion is $11
million, so you may not actually be subject to estate taxes – but if you are, you want
your beneficiaries to be able to pay the taxes without having to liquidate assets in your
estate you hold them in your real estate. They may not want to have to sell those properties
to pay estate taxes. Insurance is going to be able to ensure that
they have that choice. Another reason would be funding a buy/sell
agreement with a business partner or potentially leaving a significant legacy to charity
after you die. Keep in mind, there’s a lot of different products
out there. So if you do determine that you need life
insurance, you really want to do the research on all those different types of products so
that you get what’s most sensible for your situation. If you have any other questions contact us

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