There are many uses for life insurance, mortgages are just one. Determining your insurance needs depends on a number of factors.
The uses of life insurance reach beyond death benefits and paying off large debts. Have you ever considered that a whole life insurance policy could help you save for retirement or other long term future expenses like saving for a child’s college?
There are several uses for life insurance, and realistically a life insurance policy should be sufficent to cover all of these needs:
* Final Expense Fund
This is how much money would be needed to cover the costs associated with paying funeral expenses, debts, taxes, legal and court fees, and so on. Social security comes to the rescue for these expenses, with a maximum lump sum of $255. Too bad these expenses usually come to several thousands of dollars.
* Education Fund
If you have kids you’ll want their education to be funded in the event of your death. The cost of educating the kids (or grandkids) should be worked into your life insurance needs.
With college expenses increasing quickly this could represent a large sum.
* Income for Surviving Dependants
When you pass away will your spouse or dependants lose income that they cannot live without? In some cases Social security will kick in and help, but not in all.
* Emergency Funds
Emergencies happen. Plan for them and allow for them when considering your life insurance needs.
* Housing Funds
Alas! This is what paying off your mortgage eliminates from the list of insurance needs. As you can see there are several other good reasons to maintain your life insurance. Eliminating the housing expense just means that you need less insurance, not that you need no insurance.
There are several reasons for maintaining a life insurance policy, paying off the mortgage is only one of them. Apart from these above, a whole life insurance policy can be used to generate savings providing you with retirement income and emergency funds even before you pass away.