Do I need life insurance?

The right policy can provide protection for your loved ones without breaking your budget.

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Life insurance isn’t one-size-fits-all, and the right policy for you will depend on where you’re at in your life.

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Who needs life insurance?

These people often have the greatest need for life insurance.

Someone with co-signed debt

  • To take care of their debt. Unfortunately, your debt doesn’t die with you. If you have co-signed debt, you might want to buy a policy that covers the cost – just in case you die before paying it off.

Breadwinner

  • To replace their income. If a breadwinner dies, their policy can kick in to help their family to pay for their living expenses and maintain their lifestyle.

Business owner

  • To maintain cash flow. A life insurance policy can provide much-needed money and a sense of financial security if a key player dies. It can also be used to fund buy-sell agreements.

Homeowner

  • To ensure their family can pay the mortgage. Many homeowners take out a policy that lasts as long as their mortgage. That way, if they die, their loved ones will have the money they need to make repayments.

Wealthy individual

  • To pay estate and inheritance taxes. If your estate is worth more than $11.4 million (the IRS threshold for 2019), it may be subject to federal estate taxes. A life insurance policy can give your heirs the money they need to cover those taxes.

Stay-at-home parent

  • To pay someone else to do the tasks they perform daily. Stay-at-home parents often do a lot of unpaid labor, like cooking, cleaning and ferrying the kids around. If they die, their life insurance policies can help their family to hire someone to take over those duties.

Is there a perfect age to get life insurance?

No. Many people get life insurance after a major milestone, such as having kids, buying a house, getting a new job or getting married. But the level of coverage you need will depend on your income, expenses and needs — and it might make sense to adjust your coverage as you age.

Age Life events Financial obligations Types of insurance to consider
18-25
  • Start full-time work
  • Move out on your own
  • Start accumulating wealth
  • Everyday living expenses
  • Small personal debt
  • Disability
25-35
  • Increase in income
  • Purchase a house
  • Increase in debt
  • Marriage
  • Children
  • Short-term debts
  • Spouse and children
  • Everyday living expenses
  • Mortgage
  • Life insurance
  • Disability
  • Critical illness
35-45
  • Increase in earnings
  • Reduction of debts
  • Outstanding mortgage and personal debt
  • Investments
  • Everyday living expenses
  • Retirement fund
  • Life insurance
  • Disability
  • Critical illness
45-55
  • Maximum earnings
  • Preparing for retirement
  • Less financial commitments as children move out
  • Outstanding mortgage and personal debt
  • Investments
  • Everyday living expenses
  • Retirement fund
  • Life insurance
  • Disability
  • Critical illness
55 and Over
  • Protecting your wealth
  • Retire from full-time work
  • Finance retirement with savings
  • Everyday living expenses
  • Any outstanding debts
  • Medical costs
  • Funeral Costs
  • Life insurance
  • Critical illness
  • Funeral or burial expenses

What types of life insurance are available?

The main types of insurance available are:

  • Life insurance. In a nutshell, life insurance pays out a lump sum benefit to your beneficiaries when you die. There are two main policies to choose from: term life insurance offers protection for a set period of time, like 10, 20, 25 or 30 years; while permanent life insurance lasts your entire life and has a cash component. The most common permanent policies are whole life, universal life and variable life.
  • Disability insurance. The truest form of income protection, this kicks in to offer monthly benefits if you become fully or partially disabled and can no longer work.
  • Critical illness insurance. This coverage provides a lump sum benefit if you’re diagnosed with a critical illness that’s specified in your policy. Most policies cover up to 40 different conditions, including stroke, cancer and heart attacks.
  • Funeral or burial insurance. Designed to cover end-of-life expenses, this policy pays out a one-time lump sum benefit.

Why we like:

Compare affordable quotes from 12+ A-rated life insurance companies side-by-side.

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Why we like: Policygenius

Compare affordable quotes from 12+ A-rated life insurance companies side-by-side.

  • Get the coverage amount and term that's right for you.
  • Choose between term or whole life insurance.
  • Easy online application process.

Compare life insurance providers

Name Product Issue Ages Coverage Range Medical Exam Required State Availability
18 - 85 years old
$10,000 to $10,000,000+
Depends on provider and policy
All 50 states
Compare affordable quotes from 12+ A-rated life insurance companies side-by-side.
AIG
20 - 85 years old
$100,000 to $2,000,000
Depends on policy.
Products and product features may not be available in all states.
This well-established life insurance provider could offer you $250,000 worth of coverage for as low as $14 per month.
21 - 54 years old
$50,000 to $1,000,000
No
Not available in Alaska or New York
Affordable 2-, 10- and 20-year term life insurance policies. Instant quotes and no medical exams.
20 - 60 years old
$100,000 to $8,000,000
No
Not available in New York
Term life insurance with no policy fees and the freedom to cancel anytime. Simple application process that can get you approved for coverage instantly.
18 - 64 years old
$100,000 to $3,000,000
No
All 50 states
Customized term life insurance policies up to $3 million, no medical exam for certain applicants.

Compare up to 4 providers

What to consider when buying life insurance

When you’re deciding how much coverage to buy, ask yourself:

  • How many people depend on me financially?
  • How long could my dependents survive financially without me?
  • How long will it take for my children to become financially independent?
  • Are the assets I’m leaving behind worth enough to take care of my family?
  • How much debt am I leaving behind?
  • Would my business flop if I was no longer around?

Do you still need life insurance if you’re retired?

As you inch closer to your retirement, you’ll likely have less financial obligations and therefore, less of a need for life insurance. But a life insurance policy can help you to:

  • Leave an inheritance to your children or loved ones
  • Pay for funeral expenses, legal fees or taxes
  • Cover any outstanding debts

How much life insurance do I need?

Once you’ve determined a need for life insurance, the next step is figuring out how much coverage to buy.

To crunch the numbers, add up the cost of your financial obligations and assets, including DIME: Debt, Income, Mortgage and Education. Then, aim to take out a policy with a face value to match.

Another simple way to calculate coverage is to multiply your annual salary by five or ten. So, if you currently earn $50,000, you might buy a $250,000 or $500,000 policy.

Bottom line

If you have children or loved ones who depend on you financially, a life insurance policy can help to provide for them when you’re no longer able. Compare life insurance policies from different insurers to find the coverage that best suits your needs and budget.

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