4 of the most important factors when buying life insurance


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Buying life insurance can be confusing, so here’s what you should focus on.

Key points

  • Life insurance can help protect your family’s financial future. However, only 52% of American adults own some form of life insurance.
  • Ask yourself questions such as how much insurance you need and what type of insurance you should have to make your life insurance purchases easier.

There are many reasons to buy life insurance. It aims to protect your family’s financial future, replace lost income, and pay off future debts and expenses. According to the Life Insurance Marketing and Research Association (LIMRA), if America’s top earner died unexpectedly, 42% of families would face financial hardship in six months.

Despite the importance of life insurance, only 52% of American adults have some form of life insurance coverage. Buying life insurance doesn’t have to be complicated. Here are four important factors to consider when buying life insurance.

Do I need life insurance?

Recently, 31% of Americans said the pandemic made them more likely to purchase life insurance in the next 12 months. You should consider life insurance if you fear leaving your dependents in financial difficulty or burdening others with funeral costs if you die.

Single people with no dependents and financially independent may not need life insurance. Parents with young dependents, people with mortgages, and major earners should consider life insurance. It is important to consider your financial situation and see if life insurance is beneficial for you and your family.

How much life insurance do I need?

Once you have determined that life insurance is a necessity, the next step is to determine how much to get. A rule of thumb is to multiply your annual income by 10 and add it to all debts. If someone has debts of $250,000 and a salary of $50,000 a year, this rule of thumb is to multiply that salary by 10 to get $500,000, then add the $250,000 in debt to get a policy of $750,000. This total amount is a good starting point for determining how much life insurance you need.

The current median life insurance coverage offered by work is only $20,000 or one year’s salary. With 22% of policyholders believing they need more life insurance cover, it is important to ensure there is enough life insurance to protect family and loved ones.

What type of life insurance product should I purchase?

The two main types of life insurance are term insurance and permanent or whole life insurance. Term life insurance is the least expensive, but only lasts a certain number of years. As long as the premium is paid, coverage continues until the end of the term or until the death of your spouse. If you survive a term policy, the policy expires and no benefits are paid.

Permanent life insurance, also known as whole life insurance, provides coverage for your entire life. Permanent policies are more expensive than term policies, but offer more benefits. In addition to lifetime coverage, they offer a cash value component. Whether you choose a term or permanent policy depends on your financial goals and needs.

What is the premium?

The main misconception with life insurance is that it is too expensive. According to LIMRA, more than half of Americans overestimate the cost of life insurance three times. Life insurance premiums can be very affordable. The average cost of a $500,000 20-year term life insurance policy for a healthy 30-year-old male is $25 per month and $21 for a healthy 30-year-old female.

The premium will depend on various factors. The type of policy, the duration of the term policies, the amount of the death benefit and the state of health of the insured are key factors that will determine the amount of the premiums. The younger you are, the cheaper the premiums are generally. People can customize policies to get a policy they can afford.

Due to the misconception about life insurance costs, many people unnecessarily put their families at financial risk. Shop around and compare quotes from different insurers to find the most competitive and affordable rates.


Life insurance protection for you and your family

While many varieties of insurance coverage are designed to help protect a person’s family and assets, life insurance is an essential type of protection. The right life insurance can help protect the people who depend on you most if you die. Choosing the right life insurance policy is essential to ensure the right protection for your loved ones. We’ve sorted through the different options to bring you our picks for the best life insurance policies available today.


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