Life Insurance FAQs
Frequently Asked Questions
How much life insurance should an individual own?
Income sources (and amounts) other than salary/earnings
Whether or not the individual is married and, if so, what is the spouse’s earning capacity
The number of individuals who are financially dependent on the insured
The amount of death benefits payable from Social Security and from an employer sponsored life insurance plan
Whether any special life insurance needs exist (e.g., mortgage repayment, education fund, estate planning need), etc.
What about purchasing life insurance on a spouse and on children?
In certain circumstances, it may be advisable to purchase life insurance on children; generally, however, such purchases should not be made in lieu of purchasing appropriate amounts of life insurance on the family breadwinner(s). It is of utmost importance that the income earning capacity of the primary breadwinner be fully protected, if possible, through the purchase of the required amount of life insurance before contemplating the purchase of life insurance on children or on a non-wage earning spouse. In a dual-earning household, it is important to protect the income earning capacity of both spouses. Life insurance on a non-wage earning spouse is often recommended for the purpose of paying for household services lost at this individual’s death.
Should term insurance or cash value life insurance be purchased?
It must first be recognized that in any life insurance purchasing decision, there are at least two basic questions that must be answered:
“How much life insurance should I buy?” and
“What type of life insurance policy should I buy?”