Breaking News
More () »

Do you need life insurance? And if so, how much and what kind?

The difference between Term and Permanent/Whole Life.


How much you're paying for groceries or gas, are things that work themselves into regular conversation. Life insurance, it's not a common topic of conversation, which is why it has an awareness month, so at least you're guaranteed to get some info about it once a year. 

Let's start with the one question you need to ask yourself.

"The most common question that I field is how do I know if I need life insurance, and the easiest way to answer the question is if somebody is relying on you financially," said Jill Schlesinger, CBS News Business Analyst. 

If the answer is yes, someone is relying on you financially, it's usually in these three main categories: 

Your spouse depends on your income

You're the primary caretaker of your kids

You're the primary caretaker of adult parents or siblings

If any of these are true, you need life insurance. Next, you need to come up with a number of how much life insurance you need. There are all kinds of online calculators for this, I pulled this one from Insure.com

It helps you by asking questions in these three categories:

Money to provide income for the family

Money for funeral costs 

Money for an inheritance 

Now, let's look at the kinds of life insurance. Usually, you're deciding between Term life and Permanent/Whole life. 

Term life is often more affordable, but the coverage is for a set number of years and expires when the term is up.

"Now for many people, this is a great idea because it's very inexpensive up to age 50 if you're in good health. Most people don't need the coverage as they get older, interestingly enough, because they've already saved money. and their kids are growing up, so maybe you don't need the coverage after age 50," said Schlesinger. 

Permanent life insurance is much more expensive than term because it covers you for your entire life. The policy can build value over time, almost like a savings account that you can borrow against for a loan while you're still living, or it can be part of the lump sum payment. 


Before You Leave, Check This Out