Do You Need Life Insurance?

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Life Insurance | Financial Planning | Sapphire Wealth Advisory Group

“My wife and I don’t need life insurance. We know my wife’s parents will take care of the children”

You know what happens when you assume, right? That is what happens when couples with children feel that they don’t need life insurance and that their parents or in-laws will step in to take care of their young children should anything ever happen to them.

Let’s illustrate a scenario if this was the case, assuming no additional planning measures were addressed. Assuming one of the parents passes away prematurely while having young children at home, the grandparents may have to resort to doing the following:

  • Delay retirement to make more money in order to support the welfare of their grandchildren, which may not be enough
  • Use funds that were specifically earmarked for retirement, and divide them amongst the grandchildren, while now trying to figure out how to live a new lifestyle
  • Be required to live in the house they anticipated selling upon retirement, or even expanding the house to satisfy the living needs of their grandchildren

These are only 3 examples of things that may happen. While it is absolutely commendable that grandparents may want to care for their grandchildren, it would make sense that they have plans in place should they ever be needed. Alternatively, even if grandparents may not mind taking care of their grandchildren, there is a whole financial element that is needed. Items such as clothing, food, and even tuition can create tremendous financial stress.

While we may not be able to predict the future, the best we can do is plan accordingly. We plan for retirement by opening up retirement accounts and investing the money we deposit in them. College planning is done in a similar fashion whereby parents may open 529 accounts and invest money for purpose of pay for college tuition.

Nonetheless, as exciting as it may seem to discuss ways of making money one should also address ways of protecting those assets, and their families. One of the most fundamental ways is to make sure the appropriate amount of life insurance is in force. The type of insurance does not necessarily matter as much. I can assure you that a beneficiary of a life insurance policy does not necessary ask whether their spouse or loved one had term, whole life, or universal insurance. They are expecting a check in-hand.

When quantifying the amount of insurance needed there are different methods to conclude what is a suitable sum. However, the amount of money needed to purchase life insurance to protect a family is negligible compared to the outcome if it was not.

Registered representative of and securities offered through Hornor, Townsend & Kent, Inc. (HTK), Registered Investment Advisor, member FINRA/SIPC, 600 Dresher Road, Horsham, PA 19044, (215) 957-7300. HTK does not accept time-sensitive or action-oriented messages delivered via e-mail, including authorization to “buy” or “sell” a security or instructions to conduct any other financial transaction.  2347200PH_Jan21