Breaking down life insurance

Life insurance is widely considered a necessity for adults with dependents. Married men and women typically purchase a life insurance policy before or shortly after walking down the aisle, though some defer that purchase until they have children. Life insurance can be a significant and important investment, so it's wise for men and women of all ages to consider the following points about life insurance to determine if it's the right move for them.

* Life insurance is not just for people with dependents. Conventional wisdom may suggest life insurance is only for people with dependents. However, life insurance is a potentially valuable investment for anyone whether they have dependents or not. Men and women likely won't want to saddle their loved ones who inherit their estate with their debts, outstanding medical bills or funeral expenses, and life insurance can help pay those bills.

* Peruse any employer life insurance policy. Many employers pay for life insurance policies for their employees, and such policies may be enough for men and women without dependents and any significant financial obligations. However, employer-paid life insurance policies likely won't be sufficient for men and women with dependents, whether those dependents include a spouse or a spouse and children.

* Term coverage can prove very expensive. Some men and women feel term life insurance is a better investment than permanent coverage. However, term coverage can become very expensive as a person ages, so permanent coverage may prove a more practical option. In addition, men and women who choose term coverage should know that certain medical conditions that may arise as you age might be deemed as uninsurable, potentially putting those who will inherit your estate in a precarious financial position upon your death.

* Even men and women without a job need life insurance coverage. Many married couples in which only one partner earns a salary assume only the working spouse needs life insurance coverage. However, should the homemaking spouse pass away, the duties that person performed, such as taking care of the home and looking after any kids after school, must now be provided for, and such expenditures, especially after school child care, can be very costly. A life insurance policy can help finance those services.

* Let your own finances determine how much coverage you need. When purchasing a life insurance policy, many people use two years' salary as their guideline. However, your personal finances should ultimately dictate how much coverage you will need. Consider how much money is left on your mortgage, your investment portfolio, your spouse's earnings, and all of your assets before deciding how much coverage you need. You may need more or significantly less coverage than the standard suggested by an insurance agency.