Your need for life insurance varies with your age and responsibilities. It is a very important part of financial planning. There are several reasons to purchase life insurance. You may need to replace income that would be lost with the death of a wage earner. You may want to make sure your dependents do not incur significant debt when you die. Life insurance may allow them to keep assets versus selling them to pay outstanding bills or taxes.

Consumers should consider the following factors when purchasing life insurance:

• Medical expenses previous to death, burial costs and estate taxes;
• Support while remaining family members try to secure employment; and
• Continued monthly bills and expenses, day-care costs, college tuition and retirement.

All policies are not the same. Some give coverage for your lifetime and other cover you for a specific number of years. Some build up cash values and others do not. Some policies combine different kinds of insurance, and others let you change from one kind of insurance to another. Some policies may offer other benefits while you are still living. There are two basic types of life insurance: term insurance and whole insurance.

Some insurance experts suggest that you purchase five to ten times your current income. However, it is better to answer a few questions to figure a more accurate amount.

• How much of the family income do I provide?
• If I were to die, how would my survivors, especially my children, get by?
• Does anyone else depend on me financially, such as a parent, grandparent, brother or sister?
• Do I have children for whom I would like to set aside money to finish their education in the event of my death?
• How will my family pay final expenses and repay debts after my death?
• Do I have family members or organizations to whom I would like to leave money?
• Will there be estate taxes to pay after my death?
• How will inflation affect future needs?

Life insurance can be used to cover a variety of common expenses, like:

• Co-signed debt including student loans
• Mortgages
• College expenses for the kids
• Living expenses for your family
• Stay-at-home labor expenses (cooking, cleaning, etc.)
• Burial expenses
• Loans from family members
• Estate taxes that your heirs must pay for other assets