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It’s not uncommon to wonder how much life insurance you should have. Luckily, there are a few aspects and goals you can focus on to make sure your question is answered. This article will help give you a better understanding of how much life insurance you may need.
First, let's review how life insurance works. A life insurance plan may come in handy if you want to support loved ones after you pass. Usually, the policyholder pays scheduled premiums in exchange for the life insurance company paying their beneficiary a sum of cash after they pass.1 With most life insurance companies, you’ll determine how much life insurance you need upfront.
Before determining how much life insurance you need, it’s important to understand what life insurance covers. Typically, a life insurance plan covers a death benefit or sum of money given to the beneficiary after the policyholder passes.
The death benefit can be used to help with a host of needs, like missing income, everyday utilities, and monthly expenses. If you have any dependents, you may be able to use the life insurance death benefit to cover their education or childcare.2
Don’t wait until it’s too late. Help cover yourself and your family with affordable coverage from Aflac.
Aflac offers term, whole, and final expense life insurance. We think you’ll be able to find something that fits your needs in one of these plans, but there are other options. Deciding which type of life insurance works best for you will directly impact how much life insurance you really need.
Term life insurance is a temporary policy that can give you coverage for a set time period, such as 10, 20, or 25 years. With this type of plan, you'll want to figure out your future timeline to the best of your ability. It’s important to choose the right plan length because you must pass during that selected period for your beneficiary to receive the death benefit.3 Chatting with an agent can help you clarify how much term life insurance you may need.
Whole life insurance typically provides coverage throughout your entire life. It also contains a cash value portion that lets part of the premium payments grow in a separate tax-deferred account that the policyholder may be able to access in an emergency.4 You may want to consider this type of life insurance plan if you need lifelong coverage.
Final expense life insurance is a type of whole life insurance plan that can help cover end-of-life costs. In addition to helping cover standard funeral costs, these plans can also help with medical, accounting, and long-term care costs.5
Universal life insurance may also be worth exploring if you are drawn to growing the cash value in various ways, like using a money market rate or index. Determining if you want cash value is something you should consider when deciding how much life insurance you need.6
Here are a few tools you can explore to figure out how much life insurance you should have:
If you’re wondering how much life insurance you need, we hope this outlined the best approach to figuring out your coverage goals. Chatting with an agent can help simplify the process. Get a quote to see how Aflac can fit into your life insurance budget.
1 Investopedia - Life Insurance What It Is, How It Works, and How To Buy a Policy. Updated Dec 22, 20233. https://www.investopedia.com/terms/l/lifeinsurance.asp. Accessed Jan 17, 2023.
2 Bankrate - What does life insurance cover. Updated Aug 15,2022. https://www.bankrate.com/insurance/life-insurance/what-does-life-insurance-cover/. Accessed Jan 17, 2023.
3 Investopedia - Term Life Insurance. Updated Aug 20, 2022. https://www.investopedia.com/terms/t/termlife.asp. Accessed Jan 18, 2023.
4 Investopedia - Whole Life Insurance. Updated Sep 7, 2022. https://www.investopedia.com/terms/w/wholelife.asp. Accessed Jan 17, 2023.
5 Investopedia - What Is Final Expense Insurance. Updated Aug 20, 2022. https://www.investopedia.com/final-expense-insurance-4801018. Accessed Jan 17, 2023.
6 US News - What is Universal Life Insurance. Updated Oct 12, 2022. https://www.usnews.com/insurance/life-insurance/universal-life-insurance. Accessed Jan 17, 2023.
7 US News - What is Universal Life Insurance. Updated Oct 12, 2022. https://www.usnews.com/insurance/life-insurance/universal-life-insurance. Accessed Jan 17, 2023.
For Aflac insurance, coverage is underwritten by Aflac.
This is a brief product overview only. Coverage may not be available in all states, including New York. Benefits/premium rates may vary based on plan selected. Optional riders are available at an additional cost. The policy has limitations and exclusions that may affect benefits payable. Refer to the policy for complete details, limitations, and exclusions. For costs and complete details of the coverage, please contact your local Aflac agent.
Term and Whole Life: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, and Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400 and Riders: ICC1368050, ICC1368051, ICC1368052, ICC1368053, ICC1368054, ICC1368055. Not available in New York. Final Expense: In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. Not available in New York.
Content within this article is for informational purposes and does not constitute legal, tax or accounting advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer will have to consider in their benefits decision-making process. Aflac does not offer universal life insurance, but we can point you toward our whole life insurance policy if you have different coverage goals in mind. Chatting with an agent about your options may make this decision easier.
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