Life Insurance Is A Part of a Comprehensive Financial Plan

Some links below are from our sponsors. Here’s how we make money.

Advertiser Disclosure: Opinions, reviews, analyses & recommendations are the author’s alone. This article may contain links from our advertisers. For more information, please see our Advertising Policy.

default sharing image
What is the first thing which comes to mind when you think about financial planning? If you are like most people, it probably has to do with budgeting or investing. Yes, both of these are fundamental parts of our financial planning. You can’t win at the financial game if you don’t follow the basic art…

What is the first thing which comes to mind when you think about financial planning?

If you are like most people, it probably has to do with budgeting or investing. Yes, both of these are fundamental parts of our financial planning. You can’t win at the financial game if you don’t follow the basic art of spending less than you earn (budgeting).

Likewise, you won’t become wealthy, much less keep up with inflation if you don’t invest your money. Tracking your expenses, managing your spending, practicing proper asset allocation – these are all essential. And so is life insurance.

Life insurance is a part of a comprehensive financial plan

It’s great to pay attention to the little things when it comes to money. But you also need to make sure you take care of the big stuff.

The most valuable asset you have isn’t your bank account, your 401k, or your Roth IRA. It is the ability to create income. The single most significant financial risk many people take is the failure to protect this asset.

There are two ways you can protect your ability to create income: long-term disability insurance will help you if you become incapacitated and are unable to work. There are limits, to these policies, but they are worth looking into.

The next way to protect yourself and your family is by purchasing sufficient life insurance.

Who Needs Life Insurance? You May Be Surprised.


OK, maybe not everyone – but almost everyone.

We laid out a more detailed article regarding here, but a good rule of thumb is if your income is used to support someone else, then you should have enough life insurance to offset the loss of your income and any additional expenses which may arise from your passing.

What about DINKs?

Many people say you don’t need life insurance, especially if you are a dual income, no kids family.

The rationale is that the surviving spouse should be able to provide for him or herself because he or she would still be able to work. Unfortunately, that logic is flawed in many cases.

Many couples live on both salaries, and a surviving spouse may find it hard to continue making mortgage payments or loan payments on only one income, especially if they were the one who earned less.

Many debts can also pass on to the surviving spouse, depending on state laws. You also need to consider the possibility of hefty medical bills or other expenses related to death and burial.

What about stay at home moms?

Stay at home moms contribute to the household finances, even if they aren’t bringing home a paycheck. They take care of children, housework, cooking, cleaning, etc.

Every year the national media puts together the “salary” of a stay at home mom based on their household contributions. It is always in the six figures. Think about it another way.

Imagine you are the primary breadwinner and your spouse stayed at home and raised your children. What would happen if he or she died? Would the children go to daycare?

Would you eat out more frequently? Could you afford to pay for any associated medical or burial costs? If any of these thoughts make you cringe, then you should consider insuring your stay at home spouse.

Do retirees need life insurance?

Yes, and no. If your house is paid off, you have no consumer debt, and you have enough investments and other assets for one or both of you to make it through the rest of your life, then you may be fine without a life insurance policy.

If you still have a mortgage or any consumer debt, then you might want to consider a life insurance policy that is large enough to satisfy these debts.

Here is more on this topic.

Should you insure your children?

This is another highly contested topic. Many people don’t think you should insure a child’s life. After all, most children don’t contribute to the family income, and the thought of profiting from a child’s death is morbid.

I can understand why people may feel that way, but there are times when it may make sense to insure a child. I took out a life insurance policy on my children.


Because it only costs me $2 a month per child for $20k in life insurance.

If my child dies, the money from the policy would be enough to pay for funeral expenses, and hopefully a portion of any medical expenses which may occur.

The other benefit is that my children will be able to take the policy with them when they turn 18, regardless of whether or not something happens that would otherwise label them as uninsurable.

It’s not a huge policy, but it’s enough to make me feel better. And that is what insurance is all about, right?

There is No Time Like the Present

In most cases, it is cheaper to buy life insurance when you are younger (and healthier). If you have some life insurance, great.

Review your plan and make sure you have enough. If you don’t have enough life insurance, take a few moments and get a life insurance quote or see if you can get a policy through your employer.

Life insurance is one of the most essential parts of your financial plan. Please, for the love of your family, make sure you have enough.


Get Instant Access
FREE Weekly Updates! Enter your information to join our mailing list.

Posted In:

About Ryan Guina

Ryan Guina is the founder and editor of Cash Money Life. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started Cash Money Life in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about military money topics and military and veterans benefits at The Military Wallet.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free account here.

Reader Interactions


    Leave A Comment:


    About the comments on this site:

    These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

  1. Roger @ The Chicago Financial Planner says

    Excellent post Ryan, you make some very valid points. I look at life insurance and the need for it for every client, it is an essential consideration in a comprehensive financial plan. The online tools are an excellent way for your readers to begin to do some comparison shopping as well.

    • Ryan Guina says

      That’s a great service you do, Roger. I’ve met with a few financial planners, and none of them asked me even basic questions about my life insurance policies (the topic was never even discussed). They just jumped right into “what are your financial goals?” listened for a couple minutes then jumped into their sales pitch. It was actually disheartening to be fed a one-size-fits-all “financial plan.”

      Granted, that was only a small sample size. Hopefully more financial planners take your approach!

      • Roger @ The Chicago Financial Planner says

        Ryan thanks. I can’t tell you how many calls I’ve received from younger guys (not to be sexist but this conversation usually occurs with males) who are all amped up to invest and perhaps buy some rental property, etc. I think this is fantastic. But I always ask (assuming they are married and have kids) about a will naming a guardian and life insurance. More often than not I think you can guess the answer. I think earlier this year I actually scared one prospect off by lecturing him about this topic. Though I did email him some local estate attorneys, I think I may have come on too strong with this guy. I do feel very strongly about this topic, how easy is it to go on “date night” with your wife, the kids are with a sitter, and a drunk driver ends it all? Chilling, but this is why younger couples especially need to ensure they have adequate life insurance and at least a valid will with a named guardian in place. Sorry, end of soapbox.

        • Ryan Guina says

          I agree, 100%, Roger. Investing is the “sexier” topic, but it in my opinion, you need to have the basics in place, and that starts with life insurance, estate planning, and similar topics. I rest easy at night knowing that my wife will be taken care of financially if anything happens to me.

          My wife and I do need to update our estate plan, though. We haven’t done that since our daughter was born 6 months ago. I think now would be a good time!

  2. Cherleen @ My Personal Finance Journey says

    Great post! One of the things that work-at-home moms and dads overlook is life insurance. Some of them think that they are less prone to accidents that may cause untimely death or such. Well, we do not know what is waiting for us on the other end of the line. We used to have a life insurance from our employers, but now that we have gone freelance and running our small business, we have been considering to get one; thus, we are also looking for a good provider. Thank you for sharing the sites.

    • Ryan Guina says

      Cherleen, you just described one of the downfalls to buying life insurance through an employer. It can often be a good deal in terms of price, but there are a couple limitations people should be aware of. The first is that you can’t take it with you when you leave. Most employees change jobs every couple years, so this presents a problem when they leave their job. The other issue is that life insurance payouts through an employer are often tied to salary (such as 2 or 3 times annual salary). This may not be enough for many people. It’s not a bad idea to decline it if you can get it at a reasonable enough price, but it should only be a supplemental plan for most people.

  3. Daisy@Everything Finance says

    My partner and I are DINKS but at the moment, we do not rely on each other from a financial perspective. We rent a cheap apartment (that we would definitely be able to afford alone if one of us passed away), and we don’t have children. We have investments that would go to one another should one of us die, and life insurance through my work that would allow my partner to retire early should he want to at the rate we are going.

    However, when we buy a house, we will certainly be paying into life insurance. We will definitely be depending on each other’s incomes.

  4. Hadley says

    I think life insurance is one of the most important tools of a financial plan for a young family. If you have kids, a home and are planning for the future, a life insurance policy for both parents can go a long way to providing the financial security your children and surviving spouse will need in case you die. While you are young and healthy is the right time to purchase life insurance because you can lock-in an affordable rate for up to 30 years with term life, or choose permanent life insurance to provide lifetime protection for your family. We purchase both once we were expecting our first child, even though we both had group term life insurance through our employers. That way, you are guaranteed to have life insurance even if you lose your job or are out of work for awhile.

  5. Mike says

    The mention of the retirees brings to mind using life insurance for pension maximization. There aren’t many people with pensions anymore but using a good life insurance policy can help people get a higher monthly pension check.

    Essentially you take the life only option and then buy a life insurance policy to make sure the surviving spouse gets an income for a certain amount of years.

  6. Adam says

    A lot of great points made in this article. Life Insurance plays an important role into the overall Financial goals/objectives of individuals. If one fails to structure their insurance portfolio, their investments and savings are often the first to be liquidated to meet the income needs of a family.

Disclaimer: The content on this site is for informational and entertainment purposes only and is not professional financial advice. References to third party products, rates, and offers may change without notice. Please visit the referenced site for current information. We may receive compensation through affiliate or advertising relationships from products mentioned on this site. However, we do not accept compensation for positive reviews; all reviews on this site represent the opinions of the author. Privacy Policy

Editorial Disclosure: This content is not provided or commissioned by the bank advertiser. Opinions expressed here are author’s alone, not those of the bank advertiser, and have not been reviewed, approved or otherwise endorsed by the bank advertiser. This site may be compensated through the bank advertiser Affiliate Program.