2008 Woodie Awards
Do I Need Life Insurance?
A Financial Expert Discusses Who Should Buy Life Insurance and Why
By James Larsen
9/17/07 - Features
Last time, I discussed the two basic forms of life insurance, Term and Permanent. This time I will address who buys which type and why.
There are many types of life insurance, but for all of them the bottom line is the same: it pays cash to your family after you die. (Right!... I'm young and I'm bullet-proof. Why do I need insurance?) You may have paid your way through college and have no bills, but what of your loved ones? Who gets to deal with the aftermath if you somehow step in front of the wrong bus?
OK, I'm in the petroleum industry. How dangerous is that? This depends on what you're required to do. After graduation, I went into the steel industry and spent eight years in a melt shop. During that time, eight in-plant railroad employees lost their lives due to industrial accidents. That's one per year! I performed some of the same duties in the performance of my job. If you're sitting a rig, is there danger? Will you be working overseas?
OK, I'm working for a major aerospace contractor. How dangerous is that? Depends on where you are and who drives to work on the same roads. Is the road to Waterton Canyon any safer than the road around Boston, Pasadena or Houston?
The point is that you don't want to burden your loved ones with unexpected expenses that they have to handle under emotional duress.
So, who buys life insurance? If someone depends on you financially, you probably need life insurance. Even if you don't have a financial dependent, what about that previous question regarding loved ones?
So, you accept that fact that you need life insurance, but two questions remain: how much and what kind?
How much life insurance you need is related to your financial circumstances and goals. It is as individual as you are. The primary determinant is an analysis of your future family needs (if you have one) versus the resources your family could draw upon to support themselves. The difference is your life insurance need.
The mathematical equation seems simple enough, but coming up with all the inputs can get tricky, especially when you factor in inflation. For an estimate that takes all these variables into account, there are a variety of insurance calculators on the Internet. Just remember that the online calculators don't provide the expertise' and advice you can get from a qualified insurance professional.
There are many types of life insurance, but for all of them the bottom line is the same: it pays cash to your family after you die. (Right!... I'm young and I'm bullet-proof. Why do I need insurance?) You may have paid your way through college and have no bills, but what of your loved ones? Who gets to deal with the aftermath if you somehow step in front of the wrong bus?
OK, I'm in the petroleum industry. How dangerous is that? This depends on what you're required to do. After graduation, I went into the steel industry and spent eight years in a melt shop. During that time, eight in-plant railroad employees lost their lives due to industrial accidents. That's one per year! I performed some of the same duties in the performance of my job. If you're sitting a rig, is there danger? Will you be working overseas?
OK, I'm working for a major aerospace contractor. How dangerous is that? Depends on where you are and who drives to work on the same roads. Is the road to Waterton Canyon any safer than the road around Boston, Pasadena or Houston?
The point is that you don't want to burden your loved ones with unexpected expenses that they have to handle under emotional duress.
So, who buys life insurance? If someone depends on you financially, you probably need life insurance. Even if you don't have a financial dependent, what about that previous question regarding loved ones?
So, you accept that fact that you need life insurance, but two questions remain: how much and what kind?
How much life insurance you need is related to your financial circumstances and goals. It is as individual as you are. The primary determinant is an analysis of your future family needs (if you have one) versus the resources your family could draw upon to support themselves. The difference is your life insurance need.
The mathematical equation seems simple enough, but coming up with all the inputs can get tricky, especially when you factor in inflation. For an estimate that takes all these variables into account, there are a variety of insurance calculators on the Internet. Just remember that the online calculators don't provide the expertise' and advice you can get from a qualified insurance professional.
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