Life insurance is one of the most important financial decisions you'll make — and one of the most misunderstood. Here's a straightforward guide to determining if you need it and how much.
Who Needs Life Insurance
Definitely: Anyone with dependents (spouse, children, aging parents you support). If someone relies on your income, you need coverage.
Maybe: Dual-income couples without children, people with significant debts, business owners with partners.
Probably not: Single people with no dependents and no debt. Children (despite what some agents say).
How Much?
The quick rule: 10-12x your annual income. Better method: add up debts + 10 years of income replacement + college funding for kids + funeral costs. Subtract existing savings and spouse's income.
Term vs Whole Life
- Term life: Covers a specific period (20-30 years). Cheap. A 30-year-old can get $500K for $25-$35/month. Best for 95% of people.
- Whole life: Covers your entire life + builds cash value. 10-15x more expensive. Rarely the best financial choice — invest the difference instead.
