How much life insurance a person needs is a hard question to answer. Some call life insurance death insurance since you are insuring against your death not your life. Of course that makes for poor marketing. Basically our friendly and helpful insurance companies are there waiting to help. The challenge is to see if they are helping death survivors or helping themselves to your money. The bottom line financially is to treat insurance as a tool and as protection.
You need to consider financial obligations and future needs for survivors. This is the primary financial help that life insurance is designed to give.
Many sale pitches include, but are not limited: How much do you love your kids? What has that to do with life insurance financial assistance? Can my survivors be financially independent? Is this financially necessary? I want to leave my kids something? Hopefully, you are leaving them something else besides just money.
A person needs to look factually at what the purpose is going to be for obtaining life insurance that they really need. You also need to look at what financial burdens you are responsible for and/or burdens left for others.
Two primary choices for insurance are term and variations of whole or universal life.
Term life is often thought of as pure insurance since it is just that death insurance in case you die. Primary advantage of term insurance is the lower cost. Life or universal policies have an investment and earnings aspect to them. Which is better? It depends.
For more information on debate between term and whole or universal life check out insurance section of the site. For now, lets get an idea of how much insurance you may want to obtain.
Here is our free financial calculator.