Whether you are newly married, are supporting your parents, or have a house full of kids, you want to make sure the people who depend on you are well-supported. It’s why, if you’ve ever thought about what your loved ones’ lives will be like after you pass away, you’ve probably wondered, Should I buy life insurance? And, if so, how much life insurance do I need?

Answering those two questions are the key to giving yourself — and your loved ones — peace of mind about the future. Life insurance is designed to take some of the stress out of the unknown. It’s heartbreaking for your family to think about losing you; they don’t need that burden compounded by financial stress, too. That’s why making sure you buy sufficient life insurance coverage to support them through that transition is so important. This isn’t a place to pinch pennies. Buying enough life insurance is one of the best things you can do to ease your family into the difficulty of navigating life without you.

Still wondering, Do I need life insurance coverage? Short answer: Yes. But the other part of that query — How much life insurance should I have? — is a little more complex. That’s why we’ve built this guide. Use it to make sure you’re purchasing enough protection for your family.

Calculate Your Baseline Coverage

When you set out to find life insurance, you’ll find that policies come with different death benefits: the lump sum your family will be paid out at the time of your death. Some families just need enough to cover funeral expenses (Lincoln Heritage says that you’re looking at at least $7,000 there) and give your family some wiggle room to get used to not having your paycheck or other household support. But if you’re the primary breadwinner, you’re going to want to get a policy with a larger death benefit that can support your family for years to come.

Here are a few things to consider to help you calculate your baseline coverage:

  • Income: If your family relies on the money you bring in, make sure that your life insurance policy replaces it when you’re gone. Multiply your annual salary by the number of years that your family would need it and include that in your policy. Stay-at-home parents, you’re not exempt — technically, you might not be bringing in a paycheck, but you are saving your family significant money. Calculate child care costs and make sure that your policy would cover those if your family were left without you.
  • Hidden income: Your paycheck is one thing, but don’t forget about the other ways your work might be supporting your family. If you’re all getting health insurance through your employer or are building retirement savings through an employer-sponsored plan, for example, there’s income you earn that doesn’t go directly into your bank account. Factor that in when shopping for coverage.
  • Children: Do you have kids? If so, how old are they? Do you want them to attend college? You can include the cost of college tuition in your policy to ensure that your kids can get the education they deserve.
  • Debt: Still working your way through your college debt or a credit card bill? Still paying off your home? Your car? It’s important to know that some of that debt could transfer to your loved ones. To avoid passing on that burden, purchase a policy with a benefit that pays out enough to erase any existing debt.
  • Retirement: If you have a partner, how do you want them to be able to retire? Paying more for your policy premiums can ensure that they have the life you envision for them long after they stop working.

That’s a lot of food for thought, but you don’t have to calculate all of this on your own — there are plenty of handy life insurance calculators you can use to determine the right amount of coverage for your family’s unique needs.

This is just the first step, though. Once you have an idea of your ideal policy benefit, talk with a financial adviser or life insurance agent. They can answer any outstanding questions you have and guide you toward the best coverage. If you go the life insurance agent route, talk to agents from a few different companies to make sure that you’re not getting shoehorned into an option that doesn’t best serve you.

Look for Important Riders

A rider is a feature you add on to your policy. With a rider, your life insurance can do more than just pay out the lump-sum death benefit. Let’s say, for example, that you add a critical illness rider to your life insurance policy, then develop one of the illnesses that kicks that rider into action. That addition to your policy dips into your death benefit to cover a number of the costs associated with your illness, lessening the burden for your family.

Or say you know that your family would be better served by regular payments from your policy, rather than getting it in one lump sum at the time of your death. You can take some of the hassle out of financial management for them by adding a family income benefit rider. With this in place, your death benefit pays out in monthly installments, giving your loved ones a consistent, reliable source of income over time.

Riders will increase the cost of your life insurance, but usually not by a significant amount, and they can make a huge difference in keeping your family financially safeguarded long-term — so they’re absolutely worth considering as you build your policy.

Shop Around

Like all other types of insurance, life insurance is customized to you. This means that insurance companies look at individual factors — like your health, your age, and your sex — and then customize your policy and your premiums based on that. Because companies weigh these factors differently, you’re unlikely to get the same price for two identical policies from two different companies. Comparing policies from multiple insurance providers can help you find the most affordable option, getting you the right level of protection from your life insurance while keeping more money in your pocket.

Remember, the cost of life insurance goes up as you age. The clock is quite literally ticking on you getting the best possible price for your policy, so don’t wait to shop for the life insurance your family needs. And don’t worry — you don’t have to start from square one. We’ve rounded up some of the best life insurance options so you can shop informed.

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About the Authors

Kacie Goff

Kacie Goff Contributing Writer

Kacie Goff is a insurance and personal finance writer with over five years of experience covering personal and commercial coverage options.