Life insurance 101

There are two primary questions to answer when you're considering life insurance.

How much coverage do I need?

I long do I need coverage?

These seem relatively simple but they're usually not answered. How much do you need? Most people seem to pull a number out of the sky? "I think I need $100,000." or "$250,000 seems ok." This is not a guessing game. Consider that you as a person and income earner have a value. A monetary value in the event of your premature death. That has a value. When you insured your home, did you just pick a nice round number? No. You used an appraisal of what it would cost to replace your home in case it were destroyed. Just like your home, you need to do an appraisal of your value.

The second major question seems simple enough. It is really a pointed question and will show if you know anything about life insurance. If you don't know anything, then you'll think it is a stupid question. When in reality it is valid. Do you need coverage for a few years because you have kids in college and need to guarantee that their tuition will be paid? Do you need to cover your 30 year mortgage? Do you need coverage to pay for your funeral?

Once you answer these questions, then you can decide what life insurance policy will satisfy those needs for the lowest premium.