Life insurance helps provide financial protection for your family and loved ones. If something were to ever happen to you, life insurance would pay a death benefit to your beneficiary(s) to help them pay expenses if you were no longer around. Sample expenses include mortgage payments, legal or medical expenses, childcare, college education and outstanding debts.
If someone depends on you, whether or not you work, chances are you need life insurance. Here are some things to keep in mind when you buy life insurance.
Know how much life insurance you needA very broad rule of thumb is that your life insurance coverage should be 7 to 10 times your income. However, every person's life insurance needs are different.
For example, you'll need more insurance if you have four children compared to two or if you have credit card debt versus none.
A good place to start is at your workplaceIf your employer offers a life insurance benefit, think about enrolling in it. The cost of life a plan through work is generally affordable (just a few dollars a month in many cases) and easy to buy. You don't typically need a medical exam to enroll and your employer has done the legwork of finding a quality plan to offer its employees.
Think about supplementing your employee benefitYour employee benefits package through work is a good place to start but may not meet the needs of all people. Know how much your workplace benefit covers. If it's not enough based on your personal estimate, it might make sense for you to supplement it. Consider talking to a financial advisor. Know that, unlike a workplace benefit, when you buy life insurance outside of work a medical exam is usually required.
Be sure to review your life insurance policy yearlyAs things change in your life, your life insurance needs will too. Review your life insurance policy every year. If you've experienced a life milestone like getting married, having a baby or buying a home in the last year, you'll want to make sure your family and loved ones continue to be adequately protected.
Watch our life insurance video to learn more about protecting your finances and loved ones.