Life insurance has long been a part of estate planning in the United States. Although life insurance does not need to be a part of every person’s estate plan, it can be useful, especially for parents of young children and those who support a spouse or a disabled adult or child.

In addition to helping to support dependents, life insurance can help provide immediate cash at death. Insurance proceeds are a handy source of cash to pay the deceased’s debts, funeral expenses, and income or estate taxes.

Although you may not think about it, your ability to earn income is a significant asset. Life Insurance can help replace lost income in the event of your death. Here are some reasons people buy life insurance.

Contrary to what all too many insurance agents will tell you, you almost certainly don’t need to have life insurance for your entire life. You need it most when you’re a young adult with young kids, when you have yet to build up assets that your family can fall back on if something happens to you. If you die while your children are still in diapers, where’s the money going to come from to raise and educate them? Right: life insurance. Once they’re grown up, you no longer need it.

Life insurance has several purposes. Its most important function is to replace the earnings that would cease at the death of the insured. For businesses, life insurance is a way to protect key employees and the business itself. A third purpose is to use life insurance to pay potential estate taxes.

If you die during your earning years, your family could suffer a severe economic loss as a result of losing your current and future income. Unfortunately, your family would still have to pay its regular bills, the mortgage, and outstanding debts, and perhaps even continue saving for college and retirement. Unless you’re independently wealthy, achieving these goals may be virtually impossible for your family with the loss of your steady income. Life insurance offers a way for your family to continue living comfortably and without worry.

Life insurance has been a key component of estate planning. It can be very useful for financial planning, especially for parents of young children and those who support a spouse or a disabled adult or child. Alternatively, life insurance does not need to be a part of every person’s estate plan. For example, people who do not have minor children or financially strapped dependents may not need life insurance.

In addition to helping to supporting dependents, a life insurance policy can provide immediate cash at death to pay the deceased’s debts, funeral expenses, and income or estate taxes. Below are some key considerations to help evaluate your life insurance needs.

You need life insurance if people depend on you. If, for example, your death would cause an economic loss for the family or for somebody else, you could conceivably need life insurance, even if you weren’t married. As an example, you might have parents that you’re supporting; you might have a brother who’s ill and it’s your sole income that’s helping them with their life. So, people need life insurance if they can find that there’s a debt of some sort between themselves and someone else. Even people that don’t have that situation might consider purchasing term insurance, just because one day they might want life insurance and they may not be insurable.