You’ve worked hard to build a solid financial footing for you and your family, so you want to be sure that everything is protected. Accidents and disasters can and do happen, and if you aren’t adequately insured, it could leave you in financial ruin. You need insurance to protect your life, your ability to earn income, and to keep a roof over your head. As you evaluate the potential gaps in your insurance coverage, consider which policies you may want to include your short- and long-term financial plan. 

Types of Insurance You Need

You can insure almost anything under the sun, but certain things need to be properly insured. This insurance need typically includes your life, your health, and your property. At a minimum, it’s important to have:

• Health insurance to cover medical costs for yourself and your family
• Life insurance can provide financial security to your loved ones at your death
• Homeowner’s or renter’s insurance insures your home and valuable possessions
• Auto insurance to protect your vehicle

When comparing policies, consider how much coverage you need, what premiums you can afford, and where you’d like to set your deductible. 

How Much Life Insurance Do You Need?

How much coverage you need is an important question. You may find that you don’t need any life insurance or that you need a million dollars or more in coverage. Generally, there is an inverse relationship between one’s financial capital (hard assets currently owned) and one’s human capital (future earning potential). The greater one’s financial capital, the lower the need for life insurance.

That said, many factors need to be considered before purchasing life insurance. A good place to start is to ask yourself what you need life insurance to do for you and your family. For example, you may only need enough coverage to pay for final expenses. Or, you may want to have enough life insurance to pay off the mortgage, put your kids through college, and cover everyday living expenses for your family. Finding out whether or not you need life insurance, and if so, how much is a good place to begin.

Which Type of Life Insurance Is Right for You?

 Once you’ve decided how much life insurance you need, the thing to consider is what type of life insurance is best. You may choose a term life policy, which covers you for a set term and tends to have the lowest premiums of any life insurance option. Or, you may prefer permanent coverage in the form of whole life, universal life, or variable life coverage. While these policies may carry higher premiums, they offer the benefit of lifetime coverage with the potential to build cash value. It’s important to weigh the pros and cons of both and compare those to your life insurance needs.