The Need for Life Insurance
The cost of waiting
Mr. Opdyke remarks that single people with no dependents typically do not need life insurance. This is certainly true if one is considering only who may be the beneficiary; it is not true when one considers the potential long-term cost of waiting to get underwritten. The cost of life insurance is based on age, health condition and other factors; simply waiting as few as two or three years can result in a higher price. Many people unfortunately develop a medical condition, experience a death in the family, incur several motor vehicle violations or develop many other factors that can result in a higher premium.
Time needed to mourn
Mr. Opdyke also claims that working couples without children, and for whom the premature death of one partner would not significantly financially affect the surviving partner, do not need life insurance. I feel this point ignores the real need of a surviving spouse to grieve, mourn and heal. While it is certainly true that a surviving spouse could go to work immediately after the death of a partner, the fact is that many people need time and would rather not go back to work if they could afford it. Life insurance in this case would provide money to allow the spouse to become ready to face life solo.
Securing retirment funds
Another assertion by Mr. Opdyke is that retirees who no longer have financial obligations such as a mortgage or college expenses, don't need life insurance. I have found that many times that quite the opposite is true. Many people in the retirement years are concerned about shrinkage in their retirement funds due to market volatility or other factors. They also would rather take pension distributions over one lifetime, rather than settle for a lower monthly amount over two lifetimes. Many buy life insurance to provide a financial supplement for their surviving spouse.
Making sure the survivor benefit lasts
With regard to calculating the amount of life insurance required, Mr. Opdyke provides several formulas designed to provide replacement income for a selected number of years. This approach works only for those people who are comfortable with the idea of eventually running out of insurance benefit. However, many people don't want to face the prospect of running out of funds. This could be because they emotionally are not comfortable with a structured time frame for either remarrying or going back to work. For these people, the calculation of the death benefit must call for a principal sum that would be invested and yield sufficient interest to care for the survivor while preserving the principle.
Calculating Life Insurance Needs