how much insurance should I purchase

How Much Insurance Should I Purchase?

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The nominal amount or "death benefit" of the insurance firm (that is, the amount of income paid to the beneficiary) must be high enough to substitute the after-tax revenue you would have earned peradventure you had lived a complete life, assuming you could pay the annuity for that figure. In other words, insurance substitutes income that you did not have the opportunity to earn by living and working until retirement as a result of an early death.

You may want to ask the question "How Much Insurance Should I Purchase?"

An adequate insurance amount allows your family to maintain their lifestyle, even if your income is no longer present. The actual amount you must buy depends on your current and future income, any special circumstances that affect you or your family, and your current premium budget.

Term or Whole Life?

Some people prefer to drive Lincoln, Cadillac, or Rolls Royce, that has all the electronic devices that make driving as safe and easy as possible. Some others people prefer brands that are less personalized, which are as reliable as their more expensive counterparts, but need more hands-on attention.


Also Read: A Beginner's Guide to Insurance

Whole life is "Cadillac" insurance. The firms try to do everything on your behalf, specifically investing a part of your premiums so that the yearly cost does not increase as you age. The investment property of insurance means that generally, premiums are higher than a similar term plan of the same face value. After all, whole life insurance is meant to cover your entire life.

On the other hand, term insurance, is temporary life insurance. There are no excessive premiums to invest, no promises or guarantees after the term, which ranges from 1 to 30 years. The yearly premium for term insurance is usually lower than life insurance and it lacks an investment component, however your premiums will go up (often dramatically) once the term ends.

Both types of life, term or life insurance (or one of its derivatives) have advantages and disadvantages; both have their place based on the buyer's wants, needs, and financial goals. A trained professional insurance agent can help you decide which kind of policy is best for you based on your circumstances. But whichever you choose, make sure you have enough insurance to meet your short-term and long-term goals.


There are people who erroneously believe that life insurance is a scam. The reason is because premium money is lost if death does not occur within the coverage period (in the case of term insurance), or because many people live till old age and continue to pay for permanent premiums. These naysayers liken life insurance protection to gambling and completely give up protection.

There are those who believe that life insurance is of no help to them. The answer for these people is that it is true! The fact is, life insurance is a way of caring for responsible individuals to help make sure that their families can keep moving forward in the event of their untimely passing away, which is a really difficult time of loss. Of course, no one knows when you will die. It may be today, tomorrow, or 70 years in the future, but it will eventually happen.




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