Who Needs Life Insurance?

The essential purpose of life insurance is simple: to provide income to financial dependents when an income producer dies. If both parents in a two-parent family are earning income, then both need life insurance.

But both parents should also consider life insurance even if one works in the home rather than in the marketplace. The one working at home performs valuable services, such as child care, household management, cleaning, and cooking, that would be expensive to replace. Life insurance could help pay the cost of hiring someone to take care of those responsibilities.

People without children, whether married or single, may have little need for life insurance. Coverage may be important, however, if your spouse cannot earn sufficient income to support your current lifestyle or if you and your spouse face the prospect of caring for one or more elderly parents.

Once children arrive, insurance needs usually increase sharply and stay relatively high until the children are financially independent. Retired people may not need much or any life insurance if they have no financial dependents and no desire to use life insurance to leave an estate.

Children don't need life insurance unless its benefits would be the only way the family could pay burial and other expenses associated with a child's death. Children aren't major income earners, and they don't have financial dependents.