Do I need life insurance?

Many people assume you need life insurance, but that's not always the case.

If you are young, independent, and debt free you may not need coverage. However, if you have any dependents, or if you have outstanding debt that could be passed on to loved ones, you definitely want it.

Carefully consider how much you need based on your spending habits and your age so you don't face any gaps in coverage.

There are two kinds of life insurance: "Whole life" insurance and "term life" insurance.

What's the difference?

Using housing language, whole life is like owning. Whole life insurance provides a death benefit, as well as the accumulated cash you have paid into the policy, including the cash you've paid and the interest it earned.

As long as the premiums are paid, these policies are guaranteed for life. The downside? Whole life insurance can be expensive.

Term life is like renting. It is a cheaper and more flexible alternative. The policy is good for a set period of time. When that term is up, you'll need to buy new insurance, which gets pricier as you age. Plus, there's no accumulation of cash or investments. But, since the premiums are much cheaper, you can invest the money you're saving and potentially generate an even better return than a whole life policy.

So, weigh your options. The bottom line is: If you need life insurance, make sure you have it. Protect your family, your finances, and yourself.