Perhaps one of the most misunderstood financial products, life insurance can either be an indispensable tool to help you and your loved ones stay financially secure after your death, or a waste of money if you don’t have high-value assets that need protecting. If you’re trying to decide whether you should get life insurance, it helps to know exactly why—or if—you probably don’t need it. Knowing your options is key. There are many different types of policies with varying degrees of coverage. And numerous instances when purchasing a policy might not make sense.

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You don’t have dependents who rely on your income

If you have dependents who rely on your income, then it’s important to consider life insurance. You need to make sure that they will continue to be supported if something were to happen to you, sickness or death. It should be considered on the life of a spouse, regardless of whether he or she is a wage-earner. Life insurance on a wage-earning spouse's life provides income replacement. For non wage-earner, it provides the money to pay someone to take care of the chores that a homemaker would normally do. 


You don’t have a mortgage

Home mortgage is one of the biggest assets and liabilities on your balance sheet. Because of that, and other emotional and social reasons, many families want to ensure that surviving family members can continue to live in their home even after the death of a primary wage earner. Death is the leading cause of foreclosure, particularly when it happens to be the head and primary breadwinner of the household who passes. Unexpected medical bills are the leading cause of bankruptcy in the U.S., so it makes sense that they would lead to foreclosure as well. Chronic illness, catastrophic emergency, and inadequate health insurance can all create financial stress that ultimately means missing mortgage payments. What is your mortgage term, 15, 20 or 30 year fixed? You can get term policy for 15, 20,, 25 or 30 years.

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Your business will be fine without you

If you use a house or other personal assets as collateral for a business loan, life insurance is critical. Imagine a bereaved spouse racing to pay off the debt in order to keep the house. Liquidating the business in order to pay creditors is not always an option. The business might not be worth much without the owner at the helm, or heirs might have to sell it at a discount if they are forced to sell it quickly. What about if a crucial employee suddenly passed away? No matter how much the rest of the group worked to keep things running, the business would likely suffer revenue losses while the team regrouped. Finding and training a replacement is not cheap

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You own enough assets to pay for your final expenses

Some of the important lump-sum cash needs in contrast to ongoing income need include burial or cremation, consumer debt liquidation, dependent care, medical and hospital expenses, probate, federal and state taxes. The best way is to talk to independent insurance broker that has access to multiple carriers. They can help with needs analysis and find the most suitable policy for you.

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You are not concern about your children college expenses

Are you concerned about covering future expenses, such as college tuition? Whole life insurance policies have a cash value that increases over time, and the cash value you accumulate is yours to spend if the need arises. You can use the cash inside universal or whole policies to pay for anything, including tuition.

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You are debt-free

Some people are completely debt free. But if you have a lot of debt, would you wish that your debt will be wiped out when you die? When was the last time you considered your life insurance policy as a bailout for your debt? Yes! It can certainly be done to get you debt free! You can use the money for anything you want. You can pay off credit card debt or any other purpose without having to explain yourself.


You are not going to take out another car or mortgage loan

Would you rather borrow from yourself or lenders? Do you know that you can borrow from your whole life policy and pay yourself back? You don’t have to pay the loan back. There is a requirement to pay the annual interest on the loan. The interest rate on life insurance loans usually is considerably much less. Your credit score don't matter. If you are late paying yourself back, your credit won't be effected.

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In addition to the favorable income tax treatment generally given to life insurance death benefits, cash values also receive certain tax benefits. Principal among those tax benefits is the tax deferral of cash value growth. As a result of cash value growth a life insurance policy’s cash value can exceed the aggregate net premiums, i.e., premiums less dividends, paid for the policy; the result is gain. The policy gain is shielded from income taxation until the gain is withdrawn or the policy is surrendered.

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