There are many types and terms related to life insurance, but it is one of those benefits or “life savers” that sometimes we do not pay enough attention to.

Is it worth it to purchase life insurance? This can be answered with another question: Do I have relatives or people whom I care about, and who could not survive without my income, or who would suffer financial difficulties if I ceased to exist?

Life insurance cannot only provide income to beneficiaries in the event that the insured dies, but it can also help beneficiaries pay for the costs of the funeral (let’s face it, dying these days can be very expensive). It can also be useful for costs involving medical attention that were not covered by health insurance as well as pending debts and other expenses.

Once you consider all these elements to determine if you need to purchase life insurance, the second step would be to decide on how much coverage you will need. For example, you could need to take into account whether you want to cover annual costs of the spouse and surviving children and for how many years after death, educative costs, funeral costs, debts, leaving contingency savings mortgage payment, taxes, and so on. In summary, how much money will surviving people need every year in order to maintain certain life level.

Experts suggest purchasing life insurance by a quantity equal to 4 to 7 times the amount of annual income of the insured. However, there is no better rule than really doing the math. For instance, approximately, an insurance of 250,000 dollars could allow you to take 20,000 dollars initially to pay for costs of death of the insured, and then provide an income of 45,000 dollars per year for a total of 5 years. Those 250,000 dollars, generating interests at a 5% rate, could produce an income of 12,500 dollars per year without the need to touch the capital.

Whatever the case, life insurance could make the difference between the survival or economic ruin of the insured’s loved ones when she dies.

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