When Do You Need to Invest in Life Insurance?

We see commercials for life insurance all the time, but it's generally not something we think about. Should you be thinking about it?

If you’re a single individual with no dependents, you probably don't need life insurance. You could get it and put it in the name of someone you care about, like a parent or sibling. Otherwise, it's pretty much just money that you don't need to spend.

If you have a family and people who depend on you, you should invest in life insurance. There are two main types, term and whole. Term life insurance is what most people under the age of fifty have. If you have a whole life insurance policy and always make payments on the premiums, you keep your coverage at the same premium rate. It's recommended that most people buy term life insurance because if the provider dies, it'll replace that income.

How much life insurance you need is entirely up to you. If you won't need to support your spouse after you die, taking out one hundred thousand dollars should be sufficient. If you do have to worry about supporting a spouse and family, the numbers are different for everyone. You'll want to pay off any debts, so you need to take out enough insurance for that, and you'll also need to add up how much money your spouse and kids will need to survive.

The basic rule of thumb is to not take out too much life insurance because you don’t need to owe an insurance company extra money each month.