Life Insurance... do you need it?

I've been licensed to sell life insurance for over two years now and I'm here to tell you, nobody wants to buy life insurance. My theory is that people simply do not want to admit their own mortality. They would rather just not think about it. So, when I come along and suggest that we discuss the possible consequences of dying, I hear things like, "Oh, I don't believe in insurance," or, "no, I'm not interested."

The unfortunate fact is it's my responsibility to my clients to point out where their financial risks are, and then educate them as to how they may reduce or eliminate those risks. And, that's really all insurance is for - to help people manage or eliminate certain financial risks.

So, back to the question - do you need life insurance? In order to answer that question, first something needs to be made clear... life insurance is not for you - life insurance is for the people you leave behind. Therefore the question becomes, if you die, will the people that you leave behind suffer financially in some way?

There are a few ways to look at this issue. First and foremost one must assess what actual costs their death will incur. Usually then, we're talking about final expenses such as funeral costs, fees paid to your executor to manage your estate, a burial plot, and things of that nature. But, we're also talking about estate taxes which can turn out to be fairly significant if, for example, you own a cottage or some other valuable assets.

Secondly, we must consider something else of considerable significance: lost wages. Does your family count on your income in order to maintain their standard of living? If so, all that money that you won't earn needs to be taken into account.

So, now that we've determined that there may be a need, we need to start classifying the risks. We need to split them up into the "if you die" category, and the "when you die" category. For example, though your family may count on your income now, you do plan to retire at some point. So, that is not going to be a permanent need. Rather, that risk could be offset with a temporary product. In other words, if you die before you retire, that could create a financial issue for your family.

However, items such as final expenses and estate taxes will be an issue no matter when you pass away. So, those are better managed with a permanent insurance product. We could say that when you die, there will be costs that must be paid in some way, and insurance might provide that cash for you.

Ultimately, determining your insurance needs is a rather involved process that requires a considerable amount of thought and consideration. Of course, always be sure to deal with a qualified professional who is prepared to take the time to get to know your specific circumstances.

It seems to me as though there is something inherent in the insurance buying process that forces us to acknowledge our mortality and admit to ourselves that death is inevitable. Understandably, this is never easy. But, I'm here to tell you that there is a certain degree of relaxation and reassurance that happens once you've been through the process of dealing with this stuff. And, if there are people that count on you to provide for them, then getting adequate insurance is simply the responsible thing to do.