Life insurance contracts: why are they necessary?

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Most people understand the need for it, but many don’t have coverage.

September is Life Insurance Awareness Month.

CBS News Business analyst Jill Schlesinger said insurance is essentially the plant part of your financial plan.

“Who wants vegetables when we can gobble up the sizzle of something like investments,” Schlesinger said. “Life insurance forces you to consider the worst possible bad thing, death.”

Schlesinger suggested a question you should ask before getting coverage.

“If I were to die now, would anyone endure financial hardship?”

If you answered yes, start looking at policies.

Schlesinger suggested getting enough coverage to cover living expenses. She also said you should look for calculators online to help you figure out how much coverage you need.

TIP: Be sure to consider the cost of care if you are primarily responsible for your children or parents.

“If you’re a single parent or the main earner, you may want to leave some money to pay off debts, like student loans or the mortgage. And if you want to pre-fund college or support your surviving spouse’s future retirement needs, add that too,” Schlesinger said.

A recent survey of Zelros found that around 62% of policyholders have reviewed their cover in the last six months, but experts advise everyone to stay up to date.

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