There’s more to purchasing life insurance than just picking a level of coverage and signing up. The amount of coverage you select is important – will it be enough? And we don’t just mean to provide your family with a continued source of income should you pass away unexpectedly, there are other reasons to consider life insurance.

When starting a life insurance policy, remember these five things:

  1. Your Level of Debt
  2. Income Considerations
  3. Retirement Plans and Savings
  4. School or College Tuition
  5. Other Expenses

Level of Debt

Married or not, it is important to factor in how much debt you have and consider that your closest relatives may be hounded for payment. Are you a college student whose parent co-signed a loan for you? Have you been married several years and have a car payment or mortgage? Do you have any credit card debt? Not all debt is forgiven when someone passes away; life insurance can provide a source of money for your beneficiaries to pay off creditors and not have your debt looming over their heads.

Income Considerations

This is one of the major considerations for obtaining a life insurance policy; to serve as a replacement for your income in your absence. This can help your significant other or beneficiary continue to make payments on the house or to pay the monthly bills on time. In addition, it can help them to continue living their current life style. A spouse who doesn’t have to worry about how they will afford the mortgage on their own won’t have to move or downsize, disrupting their life (and the life of any children) as little as possible during a time of mourning. A general rule of thumb is to select a life insurance policy limit that reflects your annual salary for the next 5 years. For example, if you currently make $45,000, then you should have at least $225,000 in life insurance coverage. This will allow your beneficiaries to continue as if they had your income for at least 5 years. You can increase this amount if you think they will need longer to adjust without your income or to provide a lump sum that considers the other factors mentioned in this blog.

Retirement Plans and Savings

Does your income currently contribute to a 401(k) or other retirement investment option? Your plans for retirement for you and your spouse can be greatly affected if you are no longer contributing to the retirement savings. Life insurance allows you to plan ahead for these situations.

School or College Tuition

If you have children, it is likely that you would like for them to go to college, and although you may hope they are awarded a scholarship, some expenses may not be fully covered. Having a life insurance policy can help to ensure that your children have the funds to pay for their continuing education and not have to worry about taking out numerous student loans. This also applies if your younger children currently attend a private school – the other parent won’t have to worry about finding the means to pay for the tuition and your children’s lives can be interrupted a minimally as possible with your passing.

Other Expenses

Although we have touched these topics briefly, it is important to consider all possible expenses for your household. Including ones you may not currently have, but could, if you were to pass away. For example, if your spouse works part-time or not at all, then they may have to go to work full-time if you pass away in order to make ends meet. This could mean that there is a new need for childcare, a vehicle or related expenses (gas and upkeep) or a need for housekeeping help.

In addition, there are also the funeral and burial costs to consider. Most people purchase life insurance for the “what ifs” of middle aged life. It is unlikely that these arrangements have already been made and are another burden placed on your surviving loved ones. Medical expenses are also another added expense that could burden your household if you were sick or hospitalized prior to passing.


There is no set number for ever person but rather an overall estimate that will best provide for your loved ones. Allowing them time to grieve without worrying about bills or other expenses.