Wednesday, August 1, 2012

Why do you need life insurance?

This came to mind today after my 18yr old son decided to get himself into a small fender bender while going to work at the touristy movie theater on the beach. He was running late for work and ended up pulling into a parking spot "a little" to fast as he would say and scratched the paint of the driver's side door of the car. Ironically, the couple that owned the car saw it happen as they were walking to their car and heard it happen. They had just seen the movie, "The Dark Knight Rises". My son..... works in that same movie theater.

As I have been dealing with calls from Geico about car insurance matters the last few days it had me thinking also about life insurance. Do I have enough coverage to take care of my family if something unexpectedly were going to happen to me? I've already looked into long term care coverage (Thanks to my 78yr. old dad). By the way, his 300,000 long term care plan will run out of money in 18 more months. That's a whole different problem, back to topic here.... I currently carry roughly 1 million dollars in life insurance. My wife has about $500,000. I broke down financially everything it would take to take care of my 4 kids (youngest being 5) & wife if I were going to pass away. It's crazy how quick the costs begin to rise. Most people forget to think about child care needed if their aren't two parents to watch the kids in this equation.

While some life insurance agents aim to guide you toward whole life insurance over term life insurance (whole means more commission for them), term makes more sense for most people. Term coverage is the appropriate coverage for most individuals, as their needs are for a certain term of years while their other assets accumulate, such as retirement savings. You obviously have more debt in a young marriage with kids running around the house than you do once you hit the empty nest stage of your relationship. Make sure you factor in the following items when thinking of how much coverage do you need?
Life Insurance Quotes
Life Insurance Quotes
1.Short term financial needs? To figure this out, consider emergency expenses and outstanding short-term debts. Emergency expenses should include a cash reserve to cover medical emergencies or repairs to your home. Short-term debts include credit card balances and car loans.

2.Long Term debts? This includes your mortgage, student loans, and future tuition costs. Deciding what your children may need in the way of college funds may sound tricky. But using the cost of college today as an indicator will give you some sense of how much to plan for.

3.How much $ is needed to maintain your lifestyle? On this list you’ll want to include necessities such as childcare, household bills, and transportation expenses. Also consider how much your family spends on non-essentials, like shopping and vacations. Once you’ve come up with a figure based on one year, multiply that by the number of years you expect to be providing for your family.

4.How much are your family’s assets worth? Put a dollar amount on your family’s resources. To do this, you’ll want to include savings, stocks, bonds, mutual funds, and Social Security benefits. This list should only include your “liquid assets” — meaning assets that can be converted into cash quickly and easily.

Once you figure this out PLUS inflation you should have a good number to go with.  I also recommend Select Quote for gathering multiple quotes at once and saving time.  They worked out great for me!!

Here's a couple of calculators to help you figure out your needs too!!


  1. business insurance quote
    You have nicely explained the reasons that clearly justifies for life insurance. Those people who don't consider life insurance policy a good option will definitely get convinced after reading all these points.

  2. Great post.
    Life insurance is not an option but it is must for everyone.if you love your family and responsible towards them than you would buy life insurance .its a nominal cost so that you can fulfill your responsibility and they don't have to face the financial problem. in this policy you make your money work hard and you get a great return.

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