You've seen all the commercials on TV. You probably saw some of the advertisements online, and you might have even been asked about it at work. We hear about life insurance all the time, but just what is it and does one need it, and if I do need it, how much do I need?
What is life insurance? Life insurance would be more accurately called death insurance. Mostly, you pay money into a fund along with a group of other people as well as some fees for the life insurance company's profits, and then it would spend money to someone you choose (usually a spouse or child) if you were to die while the insurance is in effect.
So how does one know if he or she needs life insurance? Well, Do you have a husband or wife? How about a child? Is there anyone else that depends on your income? If not, chances are you probably don't need life insurance, because no one depends on your income being around to help pay for expenses. If someone does rely on you being around and your income, you most likely do need life insurance. If you had a great deal of money saved up, which would be enough money to take care of your loved ones if you were to pass, you might not need life insurance, but if you even question it, you probably should get it. This money will help replace your income and keep them financially sound while they are dealing with your loss. It is the best gift you could ever give your family.
So if you decide that you do need life insurance just how much you need? Well, just like everything else in life, it depends. You will need to be able to leave your loved ones enough money to replace the money you bring in. Let's say your 40 years old, and you make $50,000 a year. How much might I need in life insurance? How about $250,000, that seems like a significant number, right? Well, that would only replace your income for five years. In reality, to replace your income, you would need about $625,000 in life insurance to replace your income indefinitely.
If you have a wife or husband and some kids and you're not a multi-millionaire, please do your family a favor, and get life insurance.