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Do I really need life insurance?

Since life insurance is intended to “indemnify” or make someone financially whole when you die, the answer to the question…

“Do I really need life insurance?”

It comes down to whether or not anyone would be financially “injured” when you die.


It’s easy to see how a dependent child or spouse who relies on the income one generates would be “injured” should that person pass away prematurely or how a business partner might be “injured” by having a co-owner the business suddenly die. 

But what isn’t…

Always clear is when someone isn’t the primary care “bread earner” for a family and/or doesn’t have someone financially dependent upon them.  

In cases like these…

It may be difficult to determine or justify “why” someone might need to purchase a life insurance policy, which is why we wanted to take a moment and discuss some of the less common “reasons” why someone may want to purchase a life insurance policy even if they aren’t 100% sure they need to.

Top 6 reasons why someone may want to purchase a life insurance policy even if they don’t think they need one.


#1. Burial costs.

Nowadays, it’s not all that uncommon for someone living on a fixed income to find themselves in a situation where they don’t have the cash savings to pay for a proper burial or cremation, which can cost anywhere from 3,000 to 10,000 dollars.  

This is why…

Many folks will choose to purchase a small final expense insurance policy even if they don’t have anyone financially dependent upon them so that they won’t end up burdening their loved ones with expenses like these once they are gone.

#2. Providing Cash on Hand.

Sometimes individuals will find that they may not need to own a life insurance policy to guarantee their loved ones’ financial future but will choose to purchase one anyways so that if they die prematurely, their family won’t need to “scramble” for cash.

This is because…

In some situations, an individual may be quite wealthy. However, having immediate access to their wealth could prove quite challenging.   So, rather than leave their family in a “bind,” some folks will choose to purchase a small term or whole life insurance policy so that when they do pass, their family will receive a cash payment which can help them transition to life without the insured.

#3. Buy-Sell Agreement.

Life insurance policies can also be used to help finance buy/sell agreements with business owners so that if one partner dies, his or her loved ones can be adequately “bought out” of a business leaving the surviving business partner in control of the shared business.

#4. Maximize one’s pension.

Upon retirement, many individuals who have earned a pension may be given a choice regarding how they would like to receive their benefits.   And in some situations, this may mean that an individual can receive a greater “benefit” should they choose to limit a company’s obligation to just the pension recipient and not his or her spouse.

In cases like these…

It may make sense for a retire to maximize their benefit while offsetting any potential risk to a loved one by simultaneously purchasing a life insurance policy on the “pensioner”. This, of course, assumes that the cost of the insurance would be less than the additional benefit the retiree would receive. 

#5. Maximize one’s retirement.

Sometimes people can feel guilty about “living well” in retirement if it means that they won’t be able to leave something (or as much as they would like) behind for their children and/or grandchildren after they’re gone.

Which may lead…

Some folks may choose to purchase a life insurance policy that would create an “instant estate” for their loved ones while simultaneously allowing them to enjoy their retirement “guilt-free.”  

The only potential problem…

One might run into in situations like these is that not only will they have to be able to “medically qualify” for the coverage they are considering, they’ll also need to be able to “financially justify” the insurance as well.


Most life insurance companies aren’t all that “interested” in providing coverage to someone who is just looking to create a “payday” for their children/grandchildren once there gone. That said, however, most insurance companies will allow a certain amount of coverage to be purchased provided that it makes “sense” that one’s loved ones would be financially burdened if an insured passed prematurely (think estate taxes, burial expenses, etc..)

#6. Offset tax penalties.

OK, so the first thing that we should make clear is that we here at IBUSA are NOT tax advisors or financial planners. So, with regards to this topic, all we can say is that we’re frequently called by prospective clients looking to utilize a life insurance policy for purposes “other than” acquiring a death benefit for their loved ones.  

One alternative purpose…

Which we have become quite familiar with is one that is commonly referred to as “infinite banking” which can offer some pretty significant benefits to those who choose to subscribe to this strategy.

And there you have it…

Our top 6 reasons why you may need to purchase a life insurance policy even if you’re not the primary bread earner for your family or have anyone financially dependent upon you.

For more information about some of these “alternative reasons” why someone might choose to purchase a life insurance policy or just to have someone answer any questions you may have about insurance in general, feel free to give us a call, we’d love to hear from you!

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