"Our necessities are few but our wants are endless." - Henry Wheeler Shaw (Josh Billings)
Everyone needs to have a life insurance
policy, right? Wrong. In fact, unless you have a genuine need for life insurance coverage, buying a policy, no matter what the cost, would be a total waste of your
money. And that money could be put to work to build your wealth or enjoy life now instead of being wasted on insurance premiums.
Do you want life
insurance, or do you need it? That is a reasonable question you should ask yourself, and it is an essential question to answer, especially if you are trying to build your
wealth on a limited budget. Spending thousands of dollars on unnecessary life insurance coverage can be detrimental to your wealth. It is estimated that as much as
30% of all life insurance policies are on the lives of single people with no dependents. Those people probably have no need for the insurance they are paying
for.
The purpose of life insurance is to prevent a financial hardship that would be created if the insured person dies. Therefore, if your untimely death would
create a financial hardship for another, be it a spouse, your children, or a dependent parent, you need life insurance. If no hardship would be created for another by
your death, you do not need life insurance, and your money would be better used to build your wealth now.
An important consideration when formulating your
life insurance plan is to factor in the potential financial hardship that would be created by a loss of the services the insured person provides now. While a non-working
spouse may not contribute a paycheck, replacing their service--child care, for example - could create a financial hardship on the surviving
spouse.
