Importance of life insurance and when it is necessary to have one

Importance of life insurance and when it is necessary to have one

In the United States something that has become very important in the realm of estate planning is life insurance. Although it is not mandatory for a person to have life insurance as part of an estate plan. Life insurance is not only useful, but also provides you with money immediately after death. In this way, relatives can pay the debts of the deceased, funeral expenses, taxes, among others.

long-term needs

If a person is unsure about getting life insurance because of its usefulness, it is important to consider some aspects of their long-term life, such as:

Dependent people

In the event that the person is the breadwinner of a family and is the only or the largest source of income, it is best to opt for life insurance. Otherwise, if the person is not the breadwinner, it is not necessary to opt for this type of insurance.

How much money do dependents need for support?

In the event that a person wants to determine this amount, the easiest way to do it is by reviewing their income periodically. From that amount it is necessary to subtract the value of the property that the relatives will inherit.
Social Security benefits for survivors and dependents are most likely available, and the person may have union pensions or a group life insurance plan

Time in which dependent would become self-sufficient

In the event that a person has older children who are about to leave college, they most likely do not need additional income. If they are younger, the surviving spouse who would take care of the children can usually go back to work and the children can get partial scholarships for their education.

short term needs

Before a person applies for life insurance, they need to review their short-term needs to see if they will need one. In this case, it is necessary for the person to ask himself the following questions.

Immediate needs of dependents

In the event that a person is the breadwinner of the family, it is important that they take into account what income they will be leaving their family in the event of their death. Life insurance can be a good short-term alternative to leave your dependents a good sum of money.

Time for a property to be delivered

In cases where the assets do not have to go through succession, the need for life insurance is reduced to be able to cover short-term expenses. In the event that most of the person’s properties are transferred to his heirs through a will that has to go through succession, the procedure can take several months. Causing the relatives of the deceased to need cash to be able to support themselves while the entire inheritance process takes place.