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Horizon Elder Law & Estate Planning Blog

Wednesday, July 17, 2019

5 Reasons You May Not Need Life Insurance

Life insurance offers financial protection for your heirs in the event of your death. However, purchasing life insurance may not make sense for everyone. Before you begin researching the pros and cons of the various types of life insurance policies available and the cost of life insurance, you may want to review whether or not you need life insurance coverage with your California estate planning attorney.

Are There Any Sound Reasons Why You May Not Need Life Insurance Coverage?

A few reasons why some individuals may not need to invest in life insurance coverage include:

1. No one depends on your earning capacity. 

The main reason for life insurance is to provide your dependents with sufficient liquid assets to compensate for the loss of your financial contributions during your lifetime. If no one depends on your income for their living expenses or standard of living, you may not need to worry about purchasing life insurance coverage.

2. You do not need life insurance to pay for funeral costs.

Another reason for life insurance is to pay the cost of your funeral and burial. If you have sufficient liquid assets to cover all funeral and burial costs, you may not need life insurance.

3. Your employer provides term life insurance.

Many employers provide term life insurance as a benefit of employment. If you are covered by term life insurance through your employment, it may not be necessary to purchase additional life insurance coverage. However, you must consider the amount of the term life insurance coverage and the fact that you lose the insurance coverage if you are fired or quit your job when deciding what is best for you and your family.

4. Your estate will not owe substantial estate taxes or debts upon your death.

If you anticipate that your estate may owe debts or estate taxes upon your death, life insurance coverage may help provide the liquid assets needed to pay these expenses. However, if you believe your heirs may need immediate liquid assets after your death to pay debts and estate taxes, you may want to consider a life insurance trust.

5. You have substantial assets and a comprehensive estate plan.

If you have substantial assets, you may not need life insurance coverage. Your estate plan may already sufficiently provide for your heirs and dependents, pay for your funeral costs, address estate taxes, and include provisions that ensure your loved ones have everything they need after your death. If this is the case, you may not need to purchase life insurance unless you need an additional way to reduce the value of your estate and you want to explore a life insurance trust.

Contact a California Estate Planning Attorney to Discuss Your Needs and Goals

A key factor to remember is that life insurance is often much less expensive to purchase for a young adult. Even if you do not need life insurance today, you might need life insurance coverage in the future.

If you wait to purchase life insurance when you need it, you could pay substantially more money for insurance premiums than if you purchase a life insurance policy today. You may also qualify for a much lower amount of insurance coverage if you wait to purchase life insurance later in life.

Schedule a consult with our California estate planning attorney to help you assess your current needs and your long-term financial needs and determine if you should invest in a life insurance policy. Life insurance policies are just one estate planning tool that you can consider as you plan for your future.

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