Why is life insurance important?

Why is life insurance important?

Life insurance is an important financial tool for families, as it provides financial protection in the event of the death of a loved one. Without life insurance, a family may struggle to make ends meet and may be forced to make difficult financial decisions.


Here are some key reasons why life insurance is important for families:


  • Income replacement: If a breadwinner in a family dies, the family may lose their primary source of income. Life insurance can provide financial resources to help the family make ends meet and maintain their standard of living.

  • Debt protection: If a breadwinner in a family dies with outstanding debts, such as a mortgage or credit card balance, the family may struggle to pay these debts off. Life insurance can provide the financial resources to pay off these debts and protect the family's financial future.

  • College savings: If a parent dies, their children may lose their primary source of support for paying for college. Life insurance can provide the financial resources to help children pay for their education.

  • Child care: If a parent dies, their children may need to be placed in paid child care. Life insurance can provide the financial resources to cover these costs.

  • Final expenses: Life insurance can provide the financial resources to cover the cost of a loved one's funeral and other final expenses.

It is important for families to carefully consider their life insurance needs and to choose a policy that is sufficient to protect their family in the event of a loved one's death. It is also a good idea to review the policy regularly and to make any necessary changes to ensure that the coverage remains adequate.


What Parents Need to Know About Life Insurance?


As a parent, it is important to consider the financial implications of your death and to take steps to protect your family's future. Life insurance is an important tool for parents, as it provides financial resources to help your family make ends meet and maintain their standard of living in the event of your death.


Here are some key things for parents to consider when it comes to life insurance:


  • Determine your coverage needs: It is important to carefully assess your family's financial needs and to choose a life insurance policy that is sufficient to meet those needs. Factors to consider include your family's income, outstanding debts, future expenses (such as college tuition), and final expenses.

  • Choose the right type of policy: There are several types of life insurance policies to choose from, including term, whole, and universal. It is important to carefully consider the pros and cons of each type of policy and to choose the one that is right for your family.

  • Name a beneficiary: It is important to carefully consider who you want to name as the beneficiary of your life insurance policy. You may want to consider naming a trusted family member or friend as the beneficiary, or you may want to set up a trust to manage the proceeds of the policy for your children.

  • Review your policy regularly: It is important to review your life insurance policy regularly to ensure that it still meets your needs and to make any necessary changes. This can help to ensure that your family is adequately protected in the event of your death.

  • Consider additional coverage: In addition to life insurance, there are other types of insurance coverage that may be important for parents to consider, such as disability insurance and long-term care insurance.


How Much Life Insurance Do I Need?


There is no one-size-fits-all answer to the question of how much life insurance you need. The amount of coverage you need will depend on your individual circumstances, including your income, outstanding debts, future financial obligations (such as college tuition for your children), and other factors.


Here are some steps you can take to determine how much life insurance you need:


  1. Calculate your income replacement needs: First, consider how much income your family would need to maintain their standard of living in the event of your death. This should include not only your current income but also any future income you are expected to earn.

  2. Add up your debts and future financial obligations: Next, add up your outstanding debts, such as a mortgage, car loans, and credit card balances. You should also consider any future financial obligations, such as college tuition for your children or your own retirement savings.

  3. Determine your coverage needs: Once you have calculated your income replacement needs and added up your debts and future financial obligations, you can determine how much life insurance you need. As a general rule, it is a good idea to aim for a policy that is worth 10-12 times your annual income.

  4. Consider your other assets: In addition to life insurance, you may have other assets that could be used to provide financial support for your family in the event of your death. These assets could include a savings account, investments, or a paid-off home.


It is a good idea to work with a financial professional to assess your life insurance needs and to choose a policy that is right for you. It is also important to review your policy regularly and to make any necessary changes to ensure that the coverage remains adequate.


Life Insurance is often not expensive but it does cost more with age and health


Life insurance can be more affordable than many people realize, especially when you consider the financial protection it provides for your loved ones in the event of your death.

There are several factors that can affect the cost of life insurance, including your age, health, and lifestyle. In general, younger, healthier individuals will pay lower premiums for life insurance coverage.


There are also different types of life insurance policies to choose from, each with its own set of premiums and benefits. For example, term life insurance typically has lower premiums than permanent life insurance, but it does not offer the same level of long-term financial protection.


It is important to carefully consider your life insurance needs and to shop around for the best policy to meet your needs. Working with a financial professional can also be helpful in finding the right coverage at an affordable price.


In addition, it is a good idea to review your life insurance policy regularly and to make any necessary changes to ensure that it remains adequate and affordable. This may include adjusting the amount of coverage or switching to a different type of policy.

Deepak Sharma

Deepak Sharma

Insurance Advisor / WealthGuard


  • My goal is simple, protect what is important to you. I focus my energy on discovering your exposure to risk and building a comprehensive plan to protect you against those risk.