Determining Our Life Insurance Needs

Let’s face it; death is never going to be a cheerful subject.  Nobody wants to talk about it, discuss it or even think about it.  Least of all me, as I have just started a new life in my new home and I have a baby on the way.  But since death is inevitable for all of us, it’s time to give it some serious thought.  Insurance forms a big and very important part of death. Life insurance has become indispensable and the soon you invest in a good life policy, the better.

Term life insurance is the next insurance policy that I’m about to invest it.  The reason for this is that the benefits of term life insurance remain the same for the duration of the policy.  This is not the case with bond or mortgage insurance.  Term life insurance is long term insurance, mainly up to 20 years.  This type of policy together with savings that are invested in an investment fund will ensure that my unborn child’s university education is taken care of without any problems.

If you are currently without any form of life insurance policy, you need to consider the benefits of taking out a life policy as soon as possible.  The following factors need to be taken into consideration when taking out a term life policy:

  •  Any existing life insurance policies (assets)
  • Total net income of your household should one of the breadwinners pass away.
  • How much debt in total is owed to third parties and how much of it will become your burden should your spouse pass away suddenly?
  • What will be your total household expenses, including education for your children, if your spouse dies?
  • If you and your spouse both pass away, what financial requirements would need to be taken care of with regards to your children?
  • Funeral costs

Any large amounts of debt need to be covered by your life policy and a monthly flow of cash needs to be provided by your policy as well. Just as I’m planning to be completely self insured in 20 years’ time, I sincerely hope that you will use the above advice to do the same.