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Life insurance

Life insurance, like a pension plan, is one of those things that seems to creep up on you - you don't need it yet, you don't need it yet, then suddenly, it's time. So how do you assess whether you need life insurance?

In a nutshell, you need life insurance if you think you will leave financial obligations when you die. Life insurance will provide for any number of different financial obligations, but the main ones will concern your spouse, any children, or a business obligation.

Put simply, every obligation you assume should be offset by sufficient life insurance protection. A professional agent can help you determine the correct amount.

The first step is to determine what financial obligations you will have when you die - for example, if you have children, do you want to provide for their education? Also bear in mind that in two income families, each partner should be appropriately insured.

There are various types of insurance for different financial needs. You will almost certainly have mortgage term insurance as a requirement of your mortgage, which will pay off your mortgage in the event of your death. And short-term life insurance can be used to pay off loans, final expenses, etc.

Finally, you need to consider whether your survivors will be obligated to pay any inheritance tax, and what provision you might want to make for that.

This is a complicated subject, and one that many people avoid, so it is worth seeking professional help to be sure you get it right.



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