WHO SHOULD HAVE LIFE INSURANCE?

The main people who need life insurance are ones who have others depending upon them for income support. In other words, if you have a spouse who requires your income to help support them or if you have children, you should have life insurance. Also, if your spouse is a non-wage earner, it may be advisable to have life insurance coverage on them. If your spouse dies you still may need to provide for child care, housekeeping duties or other expenses that would result from their death.

HOW MUCH LIFE INSURANCE SHOULD YOU BUY?

You need to consider how much life insurance you should have to adequately protect your family in case of the untimely death of the bread-winner. The general rule of thumb is to have five to eight times the amount of your annual salary. So if you earn $60,000 per year, multiply that amount by five (the least amount you should have) to have a policy face value of $300,000.

HOW MANY POLICIES SHOULD A FAMILY HAVE?

It is advisable to purchase a single policy per family, and put the entire coverage amount on that policy. You can add coverage on your spouse in the form of a rider on the primary policy. Why is this advisable? Generally life insurance policies have a fee for processing and administration for each policy taken out. A primary policy with a spousal rider would be more economical in that separate polices would mean separate administration fees added on.

SHOULD YOU BUY LIFE INSURANCE ON YOUR CHILDREN?

In most cases, life insurance on children is not necessary. However, it may be advisable to purchase a child rider attached to primary policy in order to cover burial expenses in the case of your child's death. No one wants to make money if their child dies, but having enough to cover burial expenses can relieve a little of the burden a parent will ultimately face at that tragic time.

Purchasing a life insurance policy that has a savings portion attached for the child's future education should be looked at very carefully. In most cases, purchasing a rider on the primary policy and saving for the child's education in a separate investment vehicle will yield a better rate of return.

SHOULD THERE BE A SAVINGS PORTION ATTACHED TO MY POLICY?

Many financial experts agree that adding a savings portion to your life insurance may not be the best way to invest your money. Life insurance should really be just about that--protection for loss of income in the event of untimely death. Investing your money in a separate investment vehicle usually earns a higher rate of return.

WHAT ABOUT OTHER ADDITIONS TO MY POLICY?

Generally extra options added to your policy means that the cost of your life insurance premium may go up. This could result in you not be able to get the most amount of life insurance to adequately cover your family. An exception to this may be a Waiver of Premium benefit. This provides for payment of your premium if you become disabled for a period of time.

Ultimately, take into consideration what your family will need if you were not there to provide for them. Consider the long-term goals you have for your children, such as saving for university. Your goal when buying life insurance is to get the best value for your money. Keep this in mind when purchasing your life insurance policy. The decisions you make when buying your policy today can seriously affect your family and their quality of life in the event of your death.