“Do I need life insurance?” It’s a question many people ask, especially as they start a family or take on new debt. Ultimately, it’s a personal decision.

Before making that decision, take a moment to think about your family in the worst-case scenario, where you can’t be there to cover their financial needs. Imagine, just for a moment, what their needs would be in that situation.

If you’re asking yourself, “Should I get life insurance to protect my family?,” keep reading. Learn about who can benefit from life insurance, which situations make having it helpful, and whether life insurance is the right decision for your needs.

What is life insurance?

Let’s start with the basics: Life insurance is a type of insurance that provides a cash payout called a death benefit at the time of the policyholder’s death, if they die while the policy is in force. That payout goes to a beneficiary, which is a specific person or other entity named to receive the death benefit. The beneficiary can spend the payout on whatever they choose.

There are two main types of life insurance: term and permanent life. Term life insurance is in place for a set number of years. This typically ranges from 10 to 30 years. In contrast, permanent life insurance remains in place throughout your lifetime, providing protection as long as you pay the premiums on that policy.

Who needs life insurance?

So, who needs life insurance and the financial protection it provides? A policy can help support those you leave behind or special causes important to you. Here are some common reasons to buy:

You’re the Primary Income Provider

If you’re the main wage earner in your household, you probably have dependents who rely on you for basic needs. This includes young children under the age of 18, aging parents or relatives, and spouses who are primarily caretakers. In this situation, having life insurance can help ensure they can meet their long-term financial needs, even if you’re not there to bring home a paycheck.

You’re a Caregiver to Your Family

Even if you don’t earn an income, you may still need life insurance. If you stay home to care for young children or other relatives, family members dependent on you for care may face financial hardship if something happens to you. This could include costs to hire childcare, eldercare, or someone to maintain the household.

You Have Debt

Life insurance can help pay off your debts after death, alleviating the financial burden those debts may create for your loved ones. For example, if you die suddenly, your spouse may be liable for the remainder of the balance on your mortgage. Buying life insurance to cover your mortgage can minimize the risk of your spouse having to sell your home to cover expenses, especially if they’re suddenly only relying on a single income.

You Want To Cover Final Expenses

For many people, a big reason to purchase life insurance is to cover burial or other financial expenses. This can include costs associated with cemetery or cremation, funeral services, or nursing home or medical expenses.

You Own a Business

Do you need life insurance as a business owner? The answer is often yes. Life insurance can help protect your business by paying off existing debt, so it can keep running in your absence. Many business partners opt to purchase life insurance policies on each other to ensure that the business will stay afloat, even if one of the partners passes away. Life insurance can help your partners find others to fill your role so the business can continue on without you, or give them the funds to buy out your share of the company so both your business and your family can stay financially stable.

When is life insurance helpful?

Ask yourself again, “Why do I need life insurance right now? What can it do for my family and financial goals?” Here’s when it may help:

• You have a spouse, children, or other dependents that rely on your income.
• You have debts you want to be sure are paid off if you die, like a mortgage or personal loans.
• You want to leave behind money for a charity or another special cause.
• You need financial protection in place to pay off your business’s debts at the time of your death.
• It’s important for you to leave an inheritance to someone.

When do you need life insurance, then? It’s valuable anytime you want to ensure there’s money available at the time of your death to meet your end-of-life goals.

How much life insurance do I need?

Most people buy enough life insurance to replace their income for several years and cover inflationary costs. You may want to cover your income for five years, 10 years, or even longer. You may also have specific goals in mind, such as paying off a mortgage or ensuring there is money for college or trade school costs.

The right number is different for everyone. If you’re buying a final expense policy to cover funeral costs, your ideal coverage amount will look a lot different than if you’re buying a 30-year term policy to replace your income in your prime working years. Try our personalized term life insurance calculator to get a sense of your coverage needs.

Bottom line: Do I need life insurance?

Life insurance is a valuable tool for many life situations. With Fidelity Life, you can find affordable protection and get covered right away. Give our agents a call or start your quote today.

At Fidelity Life, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed, and updated regularly to ensure the information is as relevant as possible.