The Importance of Life Insurance

Life insurance is an important component of a complete personal financial plan. As we can't see into the future, it's likely that we will live to a ripe old age, but it is certainly not guaranteed. People who want to be financially prepared in case of adversity get life insurance for the reassurance that loved ones will be cared for and debts will be paid.

While each individual is different, there are many factors that can help to determine the need to get life insurance. One of the most important considerations is a person's family situation. If a married couple requires two incomes to maintain their lifestyle, they both need life insurance as a replacement for income if one of them should pass away. If the couple has children, the need to get life insurance becomes much greater, as raising a child from birth through age eighteen in the United States currently costs an average of $500,000. This figure can be much too low if there are special circumstances such as medical conditions and private schools.

Once a child graduates from high school, many parents want to see their child continue their education at the college level. With tuition costs for both public and private colleges on the rise, the cost of a college degree can easily exceed $100,000. Parents need to consider how their child's college education will be funded, especially if something should happen to a parent's anticipated income. In fact, providing for college expenses in case of an untimely death is one of the primary reasons that many parents get life insurance policies.

There are other reasons that people decide to get life insurance besides providing for the future of their children. Married couples without children may have large expenses, such as a mortgage, that would be difficult for the surviving spouse to pay on their own. Couples often decide to get life insurance so that the surviving spouse would not have to alter their current lifestyle in the event of a spouse's death.

Many adults have the responsibility of caring for their aging parents, and life insurance provides the peace-of-mind that elderly parents will have the financial means to secure the care they need as they age. Life expectancies in the U.S. continue to increase, so the odds are good that aging parents will live longer than people did just a generation ago.

Since each person's situation is unique, the best way to determine if you should get life insurance as well as the appropriate amount of insurance is to talk to a financial planning professional.