Clients quite often are not sure when or whether they need life insurance. My advice is always – if you have a house with a mortgage, or other big ticket items, and a spouse or significant other, and/or minor children, it’s a good idea to purchase life insurance to help pay off those big ticket items if you were to die.
It’s a good idea to sit down and do a budget to see what would need to get paid off in the event of your death. Then ask yourself, can those you leave behind (namely your spouse/significant other and children) handle those debts if they want to keep the assets tied to the debts? You will also want to consider whether you have retirement accounts or other savings because those funds may be enough to pay the things your family needs in order to maintain their lifestyle.
Once you decide how much life insurance you need, you need to determine what type of policy you want. For instance, a term life insurance policy usually allows you to obtain a higher death benefit for a cheaper premium. Whole life policies, on the other hand, combine life insurance with an investment fund. Part of your premium goes towards building cash value from the investments made by the insurance company. Universal life policies combine term insurance with a money market-type investment that pays a market rate of return whereas variable life policies have investment funds which are tied to stocks or bond mutual fund investments.
Obviously, the younger you are, the cheaper insurance will be. As you get older, premiums will increase. So take the time to talk with an insurance agent about your options, and if you are not sure what kind of insurance is right for you, talk to others who have life insurance to get their perspective.