Do you need life insurance?

[$ hoarder]

My friend who just had a baby thinks that life insurance is not necessary because she thinks her husbands investments will pay all her bills if something happens to him. I would doubt the investments would pay off the mortgage let alone anything else. I couldn't come up with a good reason on the spot but do you think there are times when life insurance is not needed? I kind of want to educate her for the baby's sake.

[disneysteve]

You are asking two different questions. The general question is: Are there times when life insurance isn't needed? The answer to that is certainly yes. If a person, or couple, has financial assets of sufficient value to provide for his/her dependents upon his/her death, there may be no need for insurance.

The more specific question is does your friend's husband need life insurance. We really can't answer that without seeing the numbers. Since she just had a baby, I'll assume that she is relatively young and her husband is a similar age. Unless he received a substantial inheritance or otherwise came into a large sum of money, it is pretty unlikely that he has had time to accumulate the kind of money that would be needed to support wife and child if he were to die tomorrow.

Term life insurance is dirt cheap. I'd suggest she speak to her husband and explain how not having any insurance makes her feel really insecure and worried about the future if anything were to happen. In fact, both of them should have insurance, not just the husband. What happens if the wife dies? Who cares for the child? Can the husband afford to hire a full-time nanny so that he can continue to work?

[kork13]

Absolutely. If you have sufficient assets to provide for those who you might be leaving behind, there's no real necessity to hold life insurance. Of course, the phrase "sufficient assets" is fairly non-specific, and depends alot on each personal circumstance.

Personally, I would consider dropping life insurance at some point along these lines: if I had enough cash/investments to cover any obligations plus at least 20-25 times my household's annual expenses -- so with $50k/yr expenses, that would be $1M-$1.25M. Basically, that would mean enough assets to provide a secure income stream after my death. Once you have enough assets to do that without a life insurance policy, there's little real necessity to continue holding on to your policy.

[MonkeyMama]

It just depends. Between the assets and her being able to work(?), it is possible that life insurance is not needed.

Our life insurance is primarily to support our kids if something happens to either or the both of us. Until adulthood. Us adults can take care of ourselves. Assets don't matter much if you are okay on the income side. You don't need a large amount of assets to cover daycare or nanny for all the years a single child needs daycare. I think $50k would easily cover a lifetime of daycare, for example. The more you live below your household's means, the less insurance you probably need AND the more assets you probably have anyway.

On the flip side, people tend to way under-insure (er, not insure at all) and not think these things through. So is likely this is the case, but it's hard to judge a book by its cover.

One question to ask her is what would happen if something happened to both her and her spouse? Do they have a will and guardians picked out? Will their guardians need money to raise their kids? For me, if something happens to me I know my spouse would be just fine, and vice versa, but am more concerned with our wishes for our children, and that no one is put out financially if they have to raise our children for a decade; that my kids have money for college and a little money to start out life since we won't be there to build wealth and give more later in life, in the worst case.

[galanins]

How does a life insurance trust work?

How does a life insurance trust work?

[The_Wiz]

Life insurance is a courtesy to your loved ones. And we never know when it's our time. It's a small investment for young people, but can be a lifesaver.

[elfen lied]

Life insurance only covers death – if you can’t provide for your family because of illness or disability, you won’t be covered.

[Rainbow Traveller]

Life Insurance provides the dual benefits of savings and security. The following benefits explain why this investment tool should be an integral part of your financial plans.
Safe and profitable long-term investment - Life Insurance is a highly regulated sector. IRDA, the regulatory body, through various rules and regulations ensures that the safety of the policyholder's money is the primary responsibility of all stakeholders. Life Insurance being a long-term savings instrument, also ensures that the life insurers focus on returns over a long-term and do not take risky investment decisions for short term gains.
Risk Cover - Life today is full of uncertainties; in this scenario Life Insurance ensures that your loved ones continue to enjoy a good quality of life against any unforeseen event.

[Copper]

Some of the young people wanna spare life insurance facility but it should thought first what gonna happen in case of a bad accident. Even a small investment could be a huge help in the bad time. Life insurance is as important as health insurance.I think even a small policy to be adopted. It won't make a big impact on our income or if it does it would be positive.

[natewebco]

If you have dependents and you aren't independently wealth, you need life insurance.

[swapnil]

I think Life Insurance is a good option, it helps you to secure your family's future even if you die, or the counter part if both the couple have life insurance then it is beneficial for both of them and for their child too, as it will help to secure child's future in any case if anything happens to the parents.

[DorindaD]

get it while you can

I was very young when i got cancer and did not have life insurance, after being cancer free 7 years i still cant get it, I have been turned down several times. DONT WAIT. Anything can happen.

[shaggy]

If you have income that your survivors would need to have replaced, you need life insurance. It's as simple as that.

I don't have it, because I only support myself.

[snafu]

I don't get it, no one questions the need to have auto insurance [yeah I know it's law] so why don't they see the benefit of having term life insurance? Perhaps they have life insurance as an employment benefit. Trouble is, should you change employment you're into a new situation that could be far more expensive.

I've had this discussion about tenant insurance with two different colleagues recently. The feel invincible, never happen to them yadda yadda.

[witchkizzle]

Life Insurance provides the dual benefits of savings and security. The following benefits explain why this investment tool should be an integral part of your financial plans.
Safe and profitable long-term investment - Life Insurance is a highly regulated sector. IRDA, the regulatory body, through various rules and regulations ensures that the safety of the policyholder's money is the primary responsibility of all stakeholders. Life Insurance being a long-term savings instrument, also ensures that the life insurers focus on returns over a long-term and do not take risky investment decisions for short term gains.
Risk Cover - Life today is full of uncertainties; in this scenario Life Insurance ensures that your loved ones continue to enjoy a good quality of life against any unforeseen event.

After all the anti-whole/universal talk we have on here, I feel a little bit surprised when I see a post like this. Especially one that is copied and pasted from a WikiAnswers webpage.