Life insurance is important… right? But, how much should you get to protect your loved ones?  And, how much should you have to pay for that protection?

Your emotions… not your logic… will help you answer that question because it’s damned near impossible to put a price on the human lifetime value of a husband, wife, mother or father.

If you died today, how much money would your family need right now to pay your debts and continue to enjoy their current standard of living?

First, itemize all of your debt obligations to include your mortgage if you have one. How much of this burden can your loved ones handle when you’re gone?

Second, what about your lost income? How much in current dollars will disappear when you die? How much in future dollars?

What type of education do you want for your kids? If you live to a ripe old age you might be able to fund the schooling out of your earned income while you’re alive. But…

Can your family afford to pay for this without that income?

And, what about household emergencies? Will there be enough savings for your family to dip into when the car breaks down… or the frig needs to be repaired?

No one likes to think about their own mortality. But, if you don’t consider this now while you’re healthy enough to qualify for life insurance… the consequences might be devastating for your loved ones.

Which brings us to the only reason you should buy life insurance… and that’s because you love someone.

Never buy a policy as an investment and don’t for a moment think it will be a practical education fund. And for heavens sake, don’t let the hustlers convince you it’s a sound retirement supplement.

The smart thing to do is integrate life insurance considerations within the overall scope of personal finance management.

Life insurance is income tax free cash that is guaranteed to be available at precisely the time it will be needed the most… when the breadwinner is gone.

It comes in a variety of types to include term, whole, variable and universal… plus many convolutions. The income tax free cash (the death benefit) is paid once the eligible beneficiary submits a claim to the life insurance company together with an original death certificate.

Books have been written and arguments abound among so-called professionals as to the best type of life insurance… but, the truth of the matter is there is no one best type. The only one that will do your loved ones any good is the policy that is actually in force at the time of your death.

And, therein lies the rub because you don’t know when you will die. As far as the life insurance company is concerned you are part of a bigger picture that includes thousands of others who are pooled together in a risk sharing environment.

From a premium expense perspective, term insurance is typically the least expensive, but this is NOT always the case. When you are relatively young the premium is more than likely affordable… however, as you age the price goes up… and up… until perhaps you won’t be able to afford it anymore.

Even premiums that are guaranteed to remain level for 20 or 30 years will expire at some point in time. And, what if you haven’t died by then and want to renew the policy? The price (if, indeed, it is even available) will be astronomical.

Some people say that when that happens you will have matured into a category of people who can now go without having any life insurance protection. Theoretically, your bills have been paid and your kids are on their own.

Of course, we know this is foolish because everyone has their own circumstances… and circumstances do change.

The need for income tax free cash at the time of someone’s death will likely always be there for those who are left behind.

Understanding life insurance is not always easy. Although the basics are pretty straight forward, the science of numbers behind the scenes can be complex and rather intimidating to the lay person.

If you can find a credentialed, long-standing life insurance agent who will speak with you intelligently and without hyping you into a purchase… take advantage of his or her knowledge.

Always look for the lowest premium… but, don’t make your decision about life insurance based solely on price.  Make sure you understand the long-term ramifications.