Life Insurance Is Not Necessary For All
Life insurance–with the help of the agents who sell it–has always brought forth the connotation that it’s a highly important, very necessary investment that everyone should have; that without it, a family could suffer tremendously in the event of an unexpected tragedy. However, many people are unaware of the fact that life insurance is not so much an investment, but a financial resource that covers risk. Most importantly, life insurance isn’t 100% necessary for each and every person, either.
Do You Really Need a Policy?
Against popular belief, not everyone needs life insurance; especially those who are single, divorced, and have no one that is financially dependent on them. Yet, not many people realize this.
In his article, “Not everyone needs a life insurance policy”, Rick Bloom of Money Matters discusses an experience he had with one of his clients. This client (John) was hoping to retire in the near future and wanted to get an opinion on whether his financial standings would be enough to last him in his retirement. However, John had a life insurance policy that he was making monthly payments towards. Each month, John would pay well over $1,200 towards his policy which was eating up a large sum of his retirement savings. If he kept up the payments, he would have to be very frugal in his retirement days. Here’s the problem, though: John got this policy back when he was married in order to ensure that his wife would be protected in case of an unexpected accident. Now, he is divorced with no children but still has his life insurance policy. At this point, without a spouse, children, or any dependents, it’s highly unnecessary for John–or anyone with a similar situation–to have a life insurance policy. Bloom wisely suggested for John to cancel his policy as soon as possible. The money he would save by doing so would provide him with the cushion he needed for a comfortable retirement (Source).
The lesson we can learn from John’s situation is that financial situations can change over time. The main reason a person purchased a life insurance policy years before, may not be applicable to their situation now; and that’s okay. However, it’s highly important to assess your current finances consistently in case there are services you pay for that you don’t necessarily need or use any more; your life insurance policy included. The best way to determine if you need your life insurance policy is by asking yourself this question: Do I have anyone in my life that would be in financial distress in the event of my passing? If you can confidently answer ‘no’, then it’s safe to say you do not need a life insurance policy at the current moment.
A Life Insurance Is the Best Solution
For those who have just determined they no longer have a use for their life insurance policy, you have many options ahead of you. However, if you don’t want to lose money by canceling your plan, your best option may be to sell your life insurance policy for a life settlement. Many life insurance companies will only offer you pennies on the dollar when you cancel your plan, which will only result in you losing a significant sum of cash than what you truly deserved–or paid for, for that matter. By exchanging your policy for a life settlement, you would receive a lump sum cash payment that’s tremendously higher than the surrender value a standard life insurance company would offer you. Of course, each policy is different, and the cash value would be determined by your, age, health, and the conditions of the life insurance policy.
If you find that your life insurance policy is no longer needed, your best option is to sell your policy for a life settlement and reap the benefits throughout the rest of your retirement.