In the United States, we are conditioned to believe that we must have an insurance policy for absolutely everything possible from our homes and vehicles to our health and life. We are told that the consequences of not having insurance are severe. In some cases, this may be true. In the case of life insurance, whether or not you truly need a policy depends on a number of personalized factors; however, consider the following when contemplating life insurance:
The purpose of a life insurance policy is to provide financial support to your family in the event of your death in most cases.
If you are young, and have nothing else to leave behind to support your family, then term life insurance may be a good option.
Once you begin to acquire other assets and build an investment portfolio, you should always reconsider your life insurance policy to decide if it is still cost-efficient.
Term life insurance does not build a cash value. There are other types of life insurance that do build a cash reserve, but they are typically much more expensive.
One plus to life insurance is that it will pay out to the beneficiaries immediately after death instead of having to pass through probate first. For this reason, some people choose to retain a small life insurance policy just to cover immediate expenses.
Life insurance as an investment strategy is risky. Conventional whole life policies do not pay at a high rate of return. Variations of the traditional whole life may offer higher returns, but at a higher risk as well.