If you have dependents (typically a spouse, children or elderly parents) that rely on you for financial support or if you have a significant amount of debt that will be left to your family, then you probably need life insurance. Consider the following scenarios:
You probably need life insurance if you:
Have kids (or other dependents) or will soon have them
Are soon to be married, or are in a committed relationship with shared financial obligations
Have debts, such as a mortgage, co-signed school loans or medical expenses, and not enough assets to cover them
Are a stay-at-home parent
Don't have enough savings to cover burial and final expenses
Want to leave a financial legacy to your loved ones
You most likely don't need life insurance if you:
Are single and have no kids or dependents
Don't have debts that your family will need to pay off after you die
Have enough wealth or savings to cover most significant expenses for your loved ones
Many people who get life insurance through their employer believe they are adequately covered. This is often not the case.
You should review your employer-provided policy and keep the following in mind to determine if the policy is right for you:
Most employer-provided term life insurance plans only cover a small amount of lost income in the event of an employee's death — often a year or two of lost salary, with an option to buy additional coverage. As a rule of thumb, you should maintain a policy in the amount of at least five to 10 times your annual salary.
An employer-provided policy is often job-dependent. If you leave your job, you will probably lose your coverage and may have to buy a more expensive policy.
If you leave your job for health-related reasons, you may have difficulty — and find it more expensive — getting new coverage when your employer-provided coverage ends.