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Exclusive: How much life insurance do I need? (Companies + Rates)

Enough to take care of your loved ones and any bills you leave behind.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer...

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UPDATED: Apr 10, 2020

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When it comes to life insurance, first on the list of questions is, “How much do I need?”

It all depends on what stage of life you are in when you purchase life insurance. Whether you are newly married, just had a baby, or are nearing retirement, your needs are different and always subject to change. Then there’s the question of which type of life insurance based on the pros and cons: term or permanent?

In this article, we help you navigate the question of how much life insurance do you need, along with many others you are likely to encounter along the way. How much life insurance you need is a decision we can provide answers for.

Use our FREE quote tool above to buy the amount of life insurance you need to cover your loved one and expenses.

Top Providers of Life Insurance

The top 10 providers of life insurance in the United States are listed below. They may or may not be a good fit for your personal needs, however. The best way to find what’s good for your circumstances is to shop and compare policies.

Top 10 Life Insurance Providers by Market Share
RankingCompaniesMarket Share
1Northwestern Mutual Life6.42%
2Metropolitan Group6.00%
3New York Life5.68%
4Prudential Financial5.57%
5Lincoln National5.36%
6MassMutual4.19%
7Aegon2.94%
8John Hancock2.83%
9State Farm2.83%
10Minnesota Mutual Group2.70%
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Once you research insurance carriers that will fit your individual life insurance requirements, you should also pay attention to their ratings. The same top 10 companies are rated the following way:

Financial Ratings of the Top 10 Life Insurance Companies
RankingCompany/GroupA.M. BestJ.D. PowerNAIC Complaint Index 2018S&PMoody's
1Northwestern Mutual LifeA++ (Superior)8100.00AA+Aaa
2Metropolitan GroupA (Excellent)7440.06A+A3
3New York LifeA++ (Superior)7700.00AA+Aaa
4Prudential FinancialA+ (Superior)7540.00AA-A3
5Lincoln NationalA+ (Superior)7500.00AA-N/A
6MassMutualA++ (Superior)7510.00AA+Withdrawn
7AegonA (Excellent)7320.00A+A3
8John HancockN/A7390.00AA-A2
9State FarmA++ (Superior)8080.00AAAa1
10Minnesota Mutual GroupA++ (Superior)N/A0.00AA-Aa3
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Ratings are an indicator of insurers’ predictability and trustworthiness. If your insurer (or potential insurer) is not in this list, you can also search the NAIC website for information on their track record on consumer complaints and more.

Average Sample Rates from Top 10 Insurers

To give you an idea of how much life insurance can cost, here are some average monthly sample rates from some of the top 10 insurers by market share for non-smokers at key ages.

The table below shows the average annual rates you can expect to pay based on demographics and tobacco use.

Average Annual Life Insurance Rates by Age, Gender, and Tobacco Use
AgeMale Non-SmokerFemale Non-SmokerFemale SmokerMale Smoker
25$183.61$164.50$248.90$328.31
35$190.40$170.47$289.34$366.70
45$274.59$247.50$494.59$648.16
55$543.23$417.01$999.43$1,386.70
65$1,308.00$898.76$2,267.36$3,333.99
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Now that you have seen some perspective on rates, let’s dive into some basics about life insurance, including what may affect your rate.

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Shopping for Life Insurance Quotes

Shopping for life insurance can be intimidating. But it shouldn’t be if you are informed through articles like this about how you should approach it before you make that first phone call to an agent or insurance company.

A really informative and unbiased introduction can be found through the National Association of Insurance Commissioners (NAIC), the regulatory arm of the life insurance industry. As stated before, each state has varying life insurance laws, but they are all regulated under the watchful eye of the NAIC.

Shopping for life insurance can include:

  • Finding an agent, financial advisor, or certified financial planner who can make ethical and unbiased recommendations
  • Buying through the internet to compare and get the best quote
  • Getting life insurance through your employer

Regardless of the method you choose to find life insurance, you should be comfortable understanding the particulars before you make a decision. You also need to keep good records of what you purchased and when you purchased it so that it isn’t forgotten in the future — especially term life insurance.

What is life insurance?

Life insurance is a legal agreement (policy) between an insurance company and a customer that pays a certain amount of money to a person chosen by the policy owner when the customer dies. It is a means to protect families from financial ruin after their loved ones die.

Life insurance in America has been around since colonial times, although it was not necessarily understood at the time, since putting a dollar value on one’s life is difficult.

Today, that question still lingers when people purchase life insurance: what is a life worth today, and more importantly, how do you calculate what your own worth is?

The answer, of course, is that your life is priceless, especially to your family and loved ones. Fortunately, life insurance is there to help pay for the realities of life’s expenses after you’re gone.

Here’s a video that helps to explain the fundamentals of how life insurance works and what it can do to protect your family and your assets — such as your home and your savings.

There are several types of life insurance, but the two most common — term and permanent — are typically what first-time buyers are encouraged to buy. We will also explain other options available since everyone’s needs vary considerably.

How Life Insurance Works

When a person buys a life insurance policy, they are entering into a contract that requires them to pay a premium (or fee), usually on a scheduled basis. This may be arranged to be monthly, semi-annually or annually.

Once you’ve decided what kind of life insurance you’re buying, your premium rates will be determined by several factors that we will discuss later, including:

  • How much life insurance you are purchasing (the amount of the death benefit payout at the time of death).
  • What kind of insurance you are buying (term or permanent)
  • Your age and gender
  • Length of the policy (term or permanent).

Paying the premium on time is extremely important to keep a life insurance policy from being terminated.

When the owner of the policy dies, a life insurance settlement or benefit payment takes place as long as the policy is in good standing and the owner’s life has surpassed the waiting period.

The waiting period refers to a time between purchasing the policy and the time of the owner’s death when the insurance company is not liable to pay a claim.

Typically, waiting periods are between two and three years, so the family needs to understand that limitation.

Who Should Consider Life Insurance

Life insurance should be considered a security feature in your lifetime financial plan. It can allow your family to maintain their financial independence and replace lost income due to an unexpected death.

Although every individual’s needs are different, there are many groups of people who should consider life insurance for certain reasons. These are:

  • Married couples – to replace lost income and protect assets and investments (such as your home)
  • Singles – to provide parents, siblings or other loved ones with coverage of burial costs and other debt (such as educational loans they have incurred on your behalf)
  • Parents – to provide future expenses for a child’s education and living expenses
  • Retirees – coverage of outstanding debt, or a safety net for unexpected medical costs
  • Grandparents – to leave a legacy to family or charity, or to cover long-term care expenses

So, whatever category you fit in — and you may fit in more than one already mentioned — you can see the importance of having insurance to help take care of your family.

What type of life insurance should I purchase?

Choosing the right kind of life insurance for your family is a highly personal decision, and a lot of it has to do with what stage of life you’re in. A 30-year-old man, for example, has a long future of unknowns to consider, while a 60-year-old man will probably have different financial needs.

This video helps to explain some basics on choosing what is right for you.

This video also emphasizes the differences between types of life insurance and why certain types of policies are preferable according to your personal situation.

  • Term – coverage for a specific period of time not covered by typical health insurance (usually 10, 20, or 30 years)
  • Permanent – coverage that does not expire, lasting an entire lifetime
  • Disability – additional coverage for an unexpected inability to continue working
  • Long-term care – coverage for extended health care and other living expenses
  • Final expense – also called burial insurance, it covers final expenses such as funerals, estate taxes, and other expenses

With all of those choices available, you should be able to identify which kind of insurance is best for you.

Here is a video that explains term life insurance, how it works, and why it’s best for younger people.

Although the video does make some assumptions — such as getting married, having children and purchasing a house — it does do a good job of explaining why term life may be the best type of insurance for younger people.

As for permanent, or whole life insurance, there are alternate reasons that it may be a better type of insurance, especially if you’re able to afford it.

This video explains how permanent life insurance and its savings component might be a better fit. The important concept to keep in mind is that permanent insurance is much more expensive than term.

What the video explains well is that permanent insurance is like “owning” versus “renting.” Term insurance is like renting life insurance that has a lease start and end date. Permanent insurance lasts a lifetime, as long as the policyholder pays the premiums on time.

Another option to consider is universal life insurance, as this graphic explains. Universal life insurance is a type of hybrid insurance, because it combines the ability to grow a fund that you pay into, while also having the ability to tap into its value, if necessary.

There are fees involved to maintain the account, and there are sometimes hefty premiums that go along with it, but fans of this type of life insurance  appreciate it for its ability to grow over a lengthy period of time.

Universal Life: How It Grows and What It Costs to Operate

The piggy bank illustration should be familiar to anyone who ever had a piggy bank as a child. Because the bank has a removable plug, anyone can always withdraw what was in there to begin with, but once you do that, other “coins” fall out from the bottom. There are fees and commissions that go along with any type of withdrawal.

More information on the other types of insurance (disability, long-term, and burial) follow later in this article.

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How to Determine the Amount of Coverage You Need

Probably the most difficult decision to make about life insurance is deciding how much coverage to purchase. Here, we cover some of the formulas to use to help you determine what’s right for you.

Calculating the amount of life insurance you need to buy is very subjective. An internet search only confuses the matter even more, so it’s best to seek the help of a financial advisor first. It’s also important to stress that an insurance agent may attempt to sell you more than is actually necessary.

There are a few ways to approach this question, with examples outlined below.

They are based on the theoretical situation of your income and how much your survivors would need to carry on without your income. You should also consider other benefits they will receive, such as Social Security survivor payments.

First, you should categorize your expected expenses and consider several scenarios such as whether your spouse works and how their own income might be compromised after your death. For example, if you have small children, your spouse may need to stay at home to care for them or pay significantly for child care expenses.

A good, neutral guide to help you can be found on the website for the nonprofit organization Life Happens. It helps you calculate how much life insurance to purchase by taking your given situation, the size of your family, and how much you’ll need to protect your children’s future.

This video from CBS also endorses using the Life Happens calculator, citing its neutral but comprehensive method for calculating your needs:

Although it’s always an uncomfortable subject — who wants to discuss buying something that is about your death, after all? It’s definitely worth evaluating to protect your family and your assets.

Here are the various methods used by financial consultants and insurance agents.

Based on Income

The industry rule of thumb is usually that you should purchase a death benefit that equals at least 10 times the amount of your income. Here’s how that philosophy works:

  • If you make $60,000, for example, you should be purchasing a $600,000 base policy.
  • For each child’s college education, you should add a minimum estimated $100,000 (for a four-year degree).
  • You may not need that much if your spouse expects to continue to work.
  • If you have a large mortgage or other debt such as student loans, you may need to add the payoff amount to your total life insurance value.

As you will see, the policy value can quickly balloon. This is why many financial planning professionals recommend more than 10 times your expected salary if you are young and just starting a family.

If you’re single but have student debt or have any family member (such as a parent) that depends financially upon you, you should consider those factors as well.

Based on DIMEF Formula

This formula takes a closer look at your total financial picture: expenses and income. It evaluates how much you’ll need by not only looking at your current situation but also considering your future income-to-debt ratio.

The DIMEF formula is an acronym for the following factors to consider in your calculations:

  • Debt (existing or anticipated) – This is especially important for young families who typically make major purchases such as a home, or have student loans.
  • Income (current and replacement) – How much you currently make and what it would take to replace that to meet expenses.
  • Mortgage (the amount necessary to pay off the entire amount in the event of death) – Building a mortgage balance into your life insurance without paying for separate expensive mortgage insurance.
  • Education (existing student loans plus that of children’s future education) – To prevent straddling your family with loans due and future college expenses.
  • Funeral (burial and final expenses) – Expect to pay between $7,500 and $15,000 for burial and final expenses — and much more for estate taxes and other obligations.

Based on LIFE formula

The LIFE formula is similar to the DIMEF formula with a different acronym.

  • Liabilities and debts: Entrepreneurs often have business partners or employees they would like to protect from debt or provide a business succession plan for.
  • Income to be replaced: If you are married or have dependents, you need to calculate the effects that loss of one (or current) income will have.
  • Final expenses: Burial and other final expenses such as estate taxes usually provide tax-free payments to the family to cover end-of-life costs.
  • Education and/or extra goals: For families, consideration should be given to long-term goals, as well as insuring your children’s lives.

Other considerations in the LIFE formula are important for entrepreneurs and business owners.

As this video explains, life insurance with a savings component can be used to help with other business expenses during periods of financial insecurity.

In this case, a forgotten life insurance policy was able to help this businessman and his partner stay afloat during a rough financial stretch. It illustrates that certain kinds of life insurance can also be utilized during your lifetime.

The importance of insuring a business with risks and fluctuations was important when these partners calculated how much life insurance they needed.

How do I use calculators for life insurance?

The most unbiased calculator to help navigate the process of deciding how much life insurance to buy is provided by Life Happens.org, a nonprofit advocacy group for life insurance. It does not endorse a particular company or product.

Its mission is to educate the public about the benefits of life insurance. Therefore, there is no sales pressure or an agent upselling you a particular product for which they will be paid a commission.

Almost all life insurance websites now have calculators online that help you determine all the factors we’ve discussed.

The online tools will go through a series of personal finance questions, such as your income and debt, your marital status and number of children.

Here is a very basic chart to get you thinking about the types of insurance available, and what you can expect to plan for.

Minimum Cost for Life Insurance Types
Insurance TypeBasic Calculation Formula
Term and Permanent LifeMinimum 10–12 times annual salary plus mortgage and other major debt
Final Expense & BurialMinimum of $15,000 is recommended
EducationAt least $100,000 per child plus any outstanding student loans
Mortgage (either PMI or Term Life)Minimum of current mortgage value
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Take your age, your marital status, and your income into consideration. Think about your lifestyle: are you frugal or carefree about spending? Most people are somewhere in between, but make sure you factor in a sense of being comfortable at all times.

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What to Consider Before Purchasing Life Insurance

Life insurance definitely is not one-size-fits-all. Most casual articles in print and online paint scenarios of life insurance for married couples and parents. But there are plenty of other people who need life insurance, so calculating how much is needed has many variables.

The following sections detail what you should consider before purchasing life insurance.

Spouse’s Income

If you’re married and both of you work, you should consider life insurance as a means to replace either of your incomes to sustain your lifestyle. For example, each of you could have individual policies in case one of you unexpectedly dies. This will help care for any children, pay off a mortgage, and meet ongoing living expenses.

If in another scenario, one works as the sole breadwinner and the other cares for children full time. Be sure not to underestimate the monetary value of the stay-at-home parent. According to Salary.com, as recently as 2018, stay-at-home parents are worth more than $162,000.

There can be unexpected costs involved with caring for a household, and children’s futures certainly should be protected.

Special Needs Family Member

If your family has a member who depends on you for financial support, this is a definite variable for you to consider. It could be a child or parent with special needs or chronic illness.

This video explains how permanent life insurance can help parents of a special needs child achieve peace of mind in the event of one or both of their deaths.

Although this video only advocates for one type of insurance, there are other options to consider. It’s always best to consult with a financial advisor or attorney before purchasing the appropriate insurance.

It isn’t just children who might be considered. If you have a parent still living who depends on you, it may be advisable to have a policy in which they are the beneficiary, to help to ensure their continued financial support in the event of your death.

And on the topic of aging parents, you may also want to look into long-term care insurance for your parents or even for yourself — especially before you face some kind of medical or quality-of-living mishap.

Disability Insurance

Another variable related to choosing the right kind of life insurance is whether you become disabled during your lifetime, meaning you’d no longer be able to work. Many people wrongly assume that Social Security Disability Income (SSDI) will kick in.

The caution here is that Social Security benefits may not be nearly enough to sustain a livable income.

People whose income depends solely on a specialized skill such as dentistry or carpentry are especially at risk for not being able to reinvent another type of career if they become partially or completely disabled. If they can no longer perform their given profession, disability insurance can help to replace lost expected income from that profession.

Here is where, in addition to life insurance, you might consider carrying a hefty disability policy. If you become disabled from your current profession, say, at age 50 years old, your Social Security Disability Income is based on how much you earned only up until that age.

That’s a feasible 15–20 years of Social Security benefit “credit” you could have earned.

This video explains the basics of how disability insurance works.

Even if your employer helps you to cover some disability insurance, it may not be enough to provide for your family’s future. Again, we recommend that you consult with a financial advisor, plus a legal review of your options is wise.

Affordability

How much can you budget for? Permanent life insurance premiums are much higher than term life insurance. However, if you have a long and healthy lifestyle, you can actually end up paying less.

Term life is understandably cheaper than permanent, but most insurance advisors advocate for permanent life insurance — if you can afford the premiums and make it part of your lifelong budgeting philosophy.

And the cash component of a permanent policy is something to consider, as this video demonstrates.

Obviously, if you are unable to afford permanent insurance in your 20s but find yourself with more income to spare in your 30s, it is definitely still worth considering, since it could help you to afford the ever-rising rates as we all age.

Divorce

Often overlooked in divorces, whether they are civil or messy, is life insurance. Often, in the complicated aftermath of divorce, the designation of life insurance benefits can suddenly be altered unexpectedly.

If you are going through a divorce, or have gone through one, it is important to examine who you have assigned in your contract as a beneficiary.

If you are the policyholder, you can change who the person (or charity, or business partner, etc.) will now be.

Laws for this vary greatly by state. As with all insurance decisions, it is best to consult with financial or legal professionals on what is best for you and your survivors.

This video describes in detail many of the excruciating decisions that must be made during and after a divorce, in terms of life insurance. At the heart of the matter is determining how spouses may still support each other (and/or their children) during the process.

The video is not necessarily applicable to your state of residence. But it does provide enough detail about the complications of divorce and life insurance to get one started if you are going through a divorce. The best course of action, of course, is to consult with your own attorney and insurance agent before making any changes to your existing life insurance policies.

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Factors That Affect Life Insurance Rates

There are several factors that insurance companies take into consideration in the underwriting process. Here, we outline basic criteria looked at by any life insurance company, especially if you’re seeking life insurance as a supplement to what your employer might already be offering.

Demographics

Your gender is a primary factor. Men pay more for life insurance because they generally don’t live as long as women. Age is also a primary factor because younger populations are less likely to die, making premiums significantly lower.

The incentive for insurance companies is to have you pay premiums for a long time. Conversely, the incentive for young people to purchase life insurance is to lock in lower rates early.

Women should not underestimate their role in the life insurance equation.

Any female reading this by now understands the value, worth and importance women play as wage earners and caregivers — often for multiple generations.

Fortunately, because of women’s track record of better health and longevity, they are given a break in life insurance rates. This basically is because women live longer and cost less to insure. Plenty of scientific documentation backs up that statement.

What women should do these days is insure themselves for their family’s sake. This video demonstrates the many facets of women’s constant roles. Life insurance should be considered a part of any financial plan for women.

Of course, the video is an ad aimed at women. It encourages women to do what they do well: take care of people. In this case, they may be compelled to purchase life insurance.

But for purposes of this article, it is important to reiterate that women should take life insurance seriously.

Whether a woman is employed full time, part-time, or is a family caregiver, chances are, a loss of a female in the family hierarchy is devastating.

Replacing a female caregiver is an often-overlooked factor when deciding how much life insurance is necessary.

Current Health & Family Medical History

Another factor that comes into play throughout your lifetime is your health and family history. If there are significant hereditary risks such as heart disease and cancer, or if you have a chronic illness such as diabetes or arthritis, insurance companies will charge higher rates for chronic illness.

It can also help lock you into a permanent policy. Smoking falls into this category of risk, as smokers pay higher life insurance premiums. However, if you already have a policy in place and you quit smoking, you may be able to save money by informing an agent of this significant and improved lifestyle change.

Obtaining life insurance at an early age when health is generally better makes good sense.

The status of your current health when you apply for life insurance is crucial for getting the best rate possible. If you’re in good health and don’t smoke or engage in unhealthy habits, getting life insurance should be relatively easy.

There is also a movement afoot within the life insurance business to offer incentives for people to remain healthy — or even improve their health. This video explains one of those incentives that was introduced a few years ago, and other insurance companies soon followed suit.

The purpose of these incentives from the insurance companies’ perspective is to of course keep you alive longer (and thus, paying your premiums longer), but it does unselfishly promote lifelong healthy habits we should all follow.

You can save lots of money during your lifetime by maintaining a healthy lifestyle, healthy weight, and avoiding risky types of behavior.

High-Risk Occupations

Life insurance can be a tricky negotiation for people in certain occupations. During the underwriting process, your occupation is considered as a factor that affects your rate — or even your eligibility. Jobs such as a commercial fisherman, an electrical lineman or even a UPS driver can weigh considerably on the rate or approval you receive.

The U.S. Bureau of Labor and Statistics tracks risky occupations, and insurance companies will pay attention if yours is included.

If you’re in a high-risk field such as airline piloting, heavy construction, or driving a truck, you can expect to pay higher premiums. Depending on other combined risks, you may be unable to be approved by certain insurers.

High-Risk Habits

It’s no surprise then, that high-risk habits — smoking is first on that list — will also affect your life insurance rates. Scrutiny of your lifestyle and your medical records will come into play with your calculated rates.

If, for example, you engage in rock climbing, skydiving, or even occasional scuba diving, there are temporary, situational insurance options available, and they should not affect your overall rates.

Your best bet, if any of these higher risks apply to you, is to shop around various companies’ rates.

You might consider no-exam life insurance as an alternative.

Just be prepared to be honest about your hobbies and lifestyle. Dishonesty may cost you dearly. If the company discovers that your application was fraudulent, the policy itself could be nulled.

How to Get the Best Life Insurance Rate

Before you apply for life insurance, you should be aware of all of your options. The best way to buy life insurance, of course, is to first compare rates.

To really be sure you are getting honest rates and avoiding an agent’s upselling (packaging other types of personal insurance along with the life policy), we suggest you first learn some basic tips on buying life insurance.

The best rates will be found through:

  • Comparisons
  • Purchasing at a younger age
  • Understanding options such as add-ons or riders and whether you need them as an addition to your policy
  • Remaining healthy
  • Paying premiums on time

This video provides a compelling argument for purchasing life insurance at an early age, such as in your 20s.

Once you start comparing rates and all of the variables that the underwriting process will scrutinize, it makes sense to start early to get the best rates.

The Bottom Line

The kind of life insurance you choose — term, permanent or a combination — should be decided upon based on your individual situation. The query of “how much?” is based on what you expect for protecting your assets and family.

If you’re young and healthy, term insurance is probably your most affordable option. If you can pay higher premiums to ensure coverage for your lifetime, then permanent (or whole life) is probably your most reassuring option for taking care of your family.

A hybrid of both types of insurance is also an option, no matter what age you are, and should be considered.

The best advice for your given situation should come from your financial or legal advisor, especially if you have special circumstances such as a disabled child or parent.

You should also evaluate your current financial situation every two to three years. Life insurance can be updated regularly. What worked in your 20s may make no sense in your 40s or 50s.

The best way to find the life insurance catered to your lifestyle and family situation is to do comparison shopping.

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FAQs

Here are some frequently asked questions regarding life insurance and the process of deciding how much you need in order to protect your family.

#1 – What happens if I leave a job that had life insurance as a benefit?

In the majority of cases, employer-sponsored life insurance (usually referred to as Group Life) is only in effect during your tenure at that particular company. In other words, you are insured only while you remain employed. If you change jobs, you usually lose that benefit.

In some cases, you may be able to (through contacting the insurer) extend the policy, but keep in mind that it will be at your own expense. Also, keep in mind that however enticing those employer-sponsored benefits may seem, most of them are not very comprehensive.

If you leave your job, you need to reevaluate your circumstances and life insurance requirements, regardless of whether you keep your policy or not.

#2 – Are death benefits taxable before being paid to my spouse or another beneficiary?

Depending upon the policy and individual circumstances, most death benefits (payouts upon a person’s death) are not taxed. This means that the beneficiary will not be taxed on the income they receive.

This is another incentive for purchasing life insurance, because the hard fact is, death is expensive. There are debts, funeral expenses, estate taxes and more. Life insurance can provide you — when purchased correctly — with assurances that your heirs will not have the additional burden of taxable income after you die.

#3 – Can I have more than one beneficiary on my policy?

Yes. You can designate who your beneficiaries are with specific percentages. For example, if you have two children, you can have the proceeds of your death benefit split in half.

If you have a particular charity as well that you would like to support after your death, you can even designate a certain amount of your assets to be given to that charitable organization. Many people do this to also help alleviate estate tax burdens on their families. Charitable donations are tax-deductible.

#4 – I can’t find any proof of my parents’ life insurance policy, even though they mentioned it. How do I find a lost policy?

Finding a lost policy — even if you don’t know what insurance company your family member subscribed to — is relatively easy. The NAIC is there for a purpose: to ensure that the process for survivors is legal. Because life insurance policies are legal documents, records exist. Go to the NAIC website to find a policy that is listed under the deceased person’s name.

Morbid as it sounds, the Social Security Administration also keeps something called a Death Master File to track all fatalities in the United States. Insurance companies are supposed to, by law, make attempts to contact heirs regarding unclaimed life insurance claims.

#5 – Should my business partner and I buy life insurance on each other?

Absolutely. It is highly recommended that entrepreneurs and business partners insure each other in the event of the other’s death. There are many types of business insurance policies that claim to cover business expenses and loss of productivity.

Life insurance for a business partner will ensure continuity for a business entity. It may allow the surviving partner to hire a replacement or help to alleviate the deceased’s business debt that was incurred when the business was started.

Calculating the amount to insure a business partner is best left to a financial advisor, CPA or legal advisor.

So, now that we have summarized the availability and basics of how to calculate your personal life insurance needs, take some time to discuss what you’ve learned and what you are concerned about with your spouse and other important family members. The best place to get started is by comparison shopping.

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