The question that most people avoid, yet it costs them further down the line. You're probably reading this because something nudged you - your partner just fell pregnant, you just signed a mortgage or maybe just a quiet Sunday afternoon when the big questions tend to surface. Whatever brought you here, asking "do I need life insurance?" is one of the most financially honest things you can do for yourself and for the people you love.
Life insurance and the contemplation of whether to get it or not, sits in that category of things that we always say we should do, but never actually get around to doing. Death is scary, uncomfortable, unpleasant to think about. Yes life insurance is not necessary for all people, but with our checklist, you can decide whether it is something that needs to be slotted into your life, or not. Because if it happens to be the case, that you are just the type of person who needs it, the risk of not having it can be monumental.
What is life insurance?
For starters, you might not be entirely sure what life insurance actually is. Life insurance is a lump-sum payout that the insured person's beneficiaries receive, in the event that the insured person passes away. There is a wide range of cover amounts that people can choose between, and different people qualify for different amounts, based on their risk profile. A risk profile is formed using factors such as a person's health, chronic conditions, history of diseases in their family, as well as lifestyle factors such as age, occupation, educational status, etc.
When do I need life insurance?
Although Google will give you a multitude of determining factors for whether you should have life insurance or not, we like to keep things simple and straightforward, and have narrowed our checklist down to three questions you should ask yourself:
- Do you have dependents? In other words, do you have people that rely on you for financial support in some capacity?
- Are you on the precipice of marriage, or are you in a committed relationship with shared financial obligations?
- Do you currently have any debts that you are paying off, and if so, do you have enough assets currently, to cover this debt?
These debts can be things such as a mortgage, monthly car payments and personal loans. Debt is sometimes necessary, given your financial situation or life stage, but taking on debt that you are unable to pay-off, should be avoided at all costs. If you are paying off debts, and you are uncertain about your ability to finish paying them off in the long-run, life insurance is the band-aid to that wound. Life insurance, in the event of your death, would be able to pay-off any of your outstanding debts, without transferring the financial burden to your loved ones.
Another very simplified method for determining whether or not to get life insurance, is provided by the Benefit Financial Services Group (2025), in an abbreviation they created called "DIME". This abbreviation states that, if you have a shortfall in any of the following:
- Debt
- Income
- Mortgage
- Education
You most probably need life insurance.
So why get life insurance?
What life insurance boils down to, is being able to empower your loved ones financially, when you are no longer there. The payout from a life insurance claim can help your family and loved ones to pay off debt, to sustain their standard of living, and to generate and grow generational wealth, if that is something that they want. The easiest way to decide whether or not life insurance is worth getting, is to think about the impact that your death would have on the people closest to you, and the impact that the payout to your loved ones would have on their lives. Life insurance is a daunting topic, that goes hand in hand with thinking about your own death, and so speaking to a financial advisor can often help to make the topic feel more approachable, and can turn your needs and life situation into measurable terms.
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