Do You Need Life Insurance? Here’s What to Consider

By Sharon Coe

A common question I hear is: “Do I really need life insurance?” The answer is: it depends on your financial situation and what you want to protect. Life insurance provides a financial safety net for your loved ones, ensuring they’re covered if something happens to you. But the right type of policy—and whether you need one at all—depends on your personal circumstances.

What Does Life Insurance Cover?

Life insurance is designed to provide financial support to your beneficiaries when you pass away. The payout, known as the death benefit, can be used for a variety of expenses, including:

• Mortgage payments or rent – Helps your family stay in their home.
• Everyday living expenses – Covers things like groceries, utilities, and childcare.
• Outstanding debts – Pays off loans, credit cards, or medical bills.
• Future costs – Helps fund college tuition or retirement savings for your spouse.
• Final expenses – Covers funeral costs, which can average around $8,000–$10,000.

In short, life insurance helps protect your family from financial strain during a difficult time.

What Type of Life Insurance Should You Get?

Choosing the right type of life insurance depends on your needs. Here are some of the most common options:

• Term life insurance is the most affordable option. It offers coverage for a set period (e.g., 10, 20, or 30 years) and a death benefit if you pass away, making it ideal for temporary needs like raising children or paying off a mortgage.
• Whole life insurance provides lifelong coverage with a cash value component that grows over time, which can be borrowed against or used as an investment, though premiums are higher.
• Universal life insurance offers similar permanent coverage but with the added flexibility of adjusting premiums and death benefits based on changing financial needs. However, it’s important to approach universal life cautiously, as changes to premiums or withdrawals can impact the policy’s long-term performance.
• Final expense insurance, or burial insurance, is a smaller policy that covers funeral and end-of-life costs, ensuring your family isn’t left with unexpected expenses.

How Much Life Insurance Do You Need?

The right coverage amount will depend on your financial situation. A good starting point is to calculate your income, debts, and future expenses your family would face without you. A rule of thumb is to have coverage equal to 5–10 times your annual income, but this varies based on your needs.

What If You Have Life Insurance Through Work?

Many employers offer life insurance as part of their benefits package, but these policies often provide limited coverage—usually one or two times your annual salary. While this can be helpful, it may not be enough to fully protect your family. Additionally, most employer-provided policies do not extend into retirement, meaning you may lose coverage once you stop working. If you change jobs, you could also lose your coverage, leaving you without protection during a critical time. Having an individual life insurance policy ensures that you remain covered no matter where you work or what stage of life you’re in, including after retirement.

When Should You Get Life Insurance?

Life insurance rates are based on factors like age and health, so the earlier you get coverage, the lower your premiums will be. If you’re young and healthy, now is a good time to lock in lower rates. But even if you’re older or have health concerns, there are still options available. Many life insurance carriers are now offering accelerated underwriting and simplified issue policies for final expense coverage. These policies allow for faster approval and often don’t require a full medical exam, making it easier to qualify, even if you’re dealing with health issues.

Major life events—such as getting married, having children, or buying a home—are also good times to consider life insurance. If others depend on you financially, having a policy in place can provide peace of mind.

Once You Have Life Insurance, It’s Important to Review It.

It’s important to do a periodic review of your life insurance to make sure your coverage still fits your needs. If you have term life insurance, this is especially crucial, as many term policies expire after 10, 20, or 30 years. Once they expire, you might need to renew at a higher premium or convert the policy to permanent insurance, which can come with a significant price increase. Additionally, some permanent policies, like universal life insurance, may have premiums that increase over time. By reviewing your policy each year, you can reassess your coverage, adjust your plan if necessary, and ensure your premiums remain manageable while still providing the protection your family needs.

Ready for Life Insurance? Let’s talk!

Deciding on life insurance can feel overwhelming, but you don’t have to figure it out alone. Whether you’re trying to determine how much coverage you need, reviewing your current policy, or figuring out which type of policy is right for you, I’m here to help. I can walk you through your options and help you find the right coverage to protect what matters most. If you already have insurance, I can also review your existing policy to make sure it’s still the best fit for your needs.