Do I Need Life Insurance?

If you have no dependents and you have enough money saved to cover your final expenses, you probably don't need life insurance, unless you would like to leave an inheritance or make a significant charitable contribution upon your passing.

If you have a spouse and/or children who are financially dependent on your income, you should purchase sufficient life insurance to replace the financial support you currently provide to them.

The amount of life insurance you need depends on several factors in addition to your current salary or wage. Don't forget the other benefits you currently receive that would be lost upon your death. For example, your family is likely to lose your employer health insurance subsidy, matching 401k contributions, and other benefits.

In addition, your family may need to incur other unplanned expenses, such as relocation costs, legal and financial advice, and tax preparation fees. And don't underestimate the cost of your funeral and other final expenses. Many financial planning experts recommend budgeting at least $15,000 for your funeral costs and other administrative costs associated with managing your estate and transferring your property to your heirs.

September 3, 2010