Aug 23

You’re a single parent with two kids, and you die unexpectedly. Or you’re married in a two-income household, and your spouse is killed in an accident. Whatever your own family circumstances, would those you left behind be able to carry on financially?
Back in Step 3 you compiled a list of all your expenses. Now is the time to review that list and see how much it would change if your children were suddenly parentles or if you or your partner were to die. Fixed expenses would remain the same. Some expenses would decrease. Some would increase— long-distance phone calls to friends for comfort, eating out so you wouldn’t be so lonely, entertainment. Would your child- care situation change? What about the future financial goals you had—paying for the children’s education, for example? Could you still cover that? What if you or your partner had to stop working as well? How would you cope? How much would it really take? How much do you really have?
Now compare the hypothetical money coming in against the hypothetical money going out in this scenario and any other scenarios you can imagine. What impact would a possible death have on the money coming in? If your survivors would have enough, then you do not need insurance. You may still want some for your emotional peace of mind, but you don’t need any—and there is a big difference between needing insurance and wanting it.
If they would not have enough, then you know you need insurance to protect yourself and your loved ones.