The answer to this question is yes. Everyone needs to have life insurance. Of course the amount of life insurance depends on everyone’s personal financial situation; which includes their assets, liabilities, and family situation. But the short answer to this question is yes, everyone needs to have life insurance.
Why Do I Need Life Insurance?
If you are in your 20’s than life insurance may not be your financial priority. You may be thinking about paying off student loans, planning a summer trip around Europe, or focusing on paying for tuition and books. However, life insurance should be somewhere on your list of financial priorities….even if it’s at the bottom of your list.
Our expenses do not stop after death. The most obvious reason for life insurance is to cover any outstanding debts that are existing at the time of our death. Believe it or not student loans, credit cards, and car loans all have to be paid off in full, even if the owner is deceased.
Even if we don’t have any debts, we will still need to have enough life insurance to cover our final expenses upon death. Believe it or not, death is actually a very costly expense. It would not be ideal for our family members to grieve over their loss while trying to find the money to cover all of our final expenses.
How Much Life Insurance Do I Need?
Funeral arrangements including the burial ceremony, the casket or cremation, a mass, and the flowers can also be a very costly expense. If we do not have life insurance to cover our funeral arrangements, our family will be obligated to pay for any final expenses out of their pocket.
If we are renting an apartment, the lease is not void upon death. The landlord will usually charge the equivalent of 3 months’ rent to break the lease. This is another added final expense upon death.
They say that two things in life are certain, death and taxes. This could not be more true. There are two tax returns that need to be filed in the year of someone’s death. The regular annual tax return needs to be filed, along with a final tax return.
Life insurance is a safe way to ensure that all debts will be paid off, and all expenses will be paid at the time of death. For someone who does not have any debts, I would recommend $20,000 to $25,000 of life insurance to cover all final costs and expenses. Of course this is a general statement and the amount of personal life insurance is different for every individual.