So You Think You Know Life Insurance? (part 1)

Have you heard of the Life Insurance Movement? – if not, today’s the day – Jeff Rose at is sponsoring this movement with over 100 bloggers participating, find out more at

Sometimes a life insurance policy is just a life insurance policy. When looking at life insurance, it’s important to keep that analogy in mind – that life insurance is, at its core, a financial leverage tool to provide funds in the event of death for someone who is financially dependent on you, the insured. Everything else is just icing on the basic cake.Educating yourself will allow you to have the amount and type of life insurance to best fit your needs. Asking the right questions and looking deeper into the different policies will help you to answer the questions, understand what you’re buying, best meet your needs and save money all at once.

The KISS (Keep It Simple Stupid) theory most certainly applies here. If you don’t understand something you shouldn’t be purchasing it. Life insurance policies range from the incredibly easy to understand to the most complex financial products in the marketplace.

A good starting point in considering whether life insurance makes sense for you is if you have a need for it. This is as mentioned above – is there someone who is financially dependent upon you either on a personal basis (such as spouse/domestic partner), child, parent etc. or on a business basis (partner, key-person, etc.) And if there is someone who is financially dependent upon you – are there other assets to meet that need – in other if you’re Warren Buffett and you have a few billion dollars in the bank, you don’t have a need for life insurance as a $1 million policy isn’t going to help his heirs very much. However, even someone like Warren Buffett may still benefit from a life insurance policy for its usage as a financial leverage tool. So ask yourself, is there a financial dependence – if yes, you need life insurance – if not, then you don’t.

So you’ve determined that you need Life Insurance – now all you have to do is figure out how much and what type – real easy right? And to those questions, there are as many answers as there are people to ask. The key again is educating yourself and determining what your true needs are. There are many different methods to calculating the proper amount of coverage ranging from the simple to the incredibly complex. The main issue is that you’re trying to hit a moving target.

– stay tuned next week for part two!

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