Is life insurance worth it?

Life insurance is a valuable thing to have in case you need to provide financial protection for your loved ones in the event of your death. 

In exchange for you making a monthly payment to your life insurance provider (often discounted if paid annually), your beneficiaries will receive a pre-determined sum of money after you have died. That amount can range from tens of thousands of dollars to millions, depending on different factors and the details of your plan.

Protecting your loved ones even after you're gone sounds like a great benefit, but is life insurance actually worth the cost? Or will you wind up paying for something you never use?

If you're thinking a life insurance policy could be right for you, get a free online price quote now so you know exactly what to expect.

Is a life insurance policy worth it?

Here are five factors to consider when deciding if life insurance is worth the price tag.

Your dependents

Your dependents are the people who will be covered by your life insurance policy. If you're married, have school-age children, have a mortgage or are generally relied on financially you should consider life insurance. 

Think about the bills and expenses you have and the money you make. Now take yourself out of the equation. If there are no (or limited) alternatives for your dependents to make ends meet in your absence, then you could greatly benefit from having a life insurance policy.

It's easy to get started. Start by getting a free online price estimate here now. 

On the other hand, if you're single and living alone with no spouse or children, you may not need life insurance. Life insurance is generally most beneficial to fill the economic gaps caused by someone's death. If you are not financially supporting anyone besides yourself, life insurance may not be worth it right now.

Your finances

For most people, finances are tied to a few factors: career, investments, home equity and so on. Many Americans do not have the equivalent amount a life insurance policy provides stashed away in a savings account. For these people (the vast majority of American adults) a life insurance policy makes sense. 

Even if you never need to use it, the relatively inexpensive costs of purchasing and keeping a policy may be outweighed by the potential risk of not having one.

There are exceptions. If people are dependent on you but you already have a substantial amount of money to leave them (perhaps you've inherited a significant sum or are considerably well off financially), you probably can afford to skip life insurance. Otherwise, consider getting started now, before costs rise and your coverage is limited.

Your age

If you're young with a new family you'll want life insurance to protect you and the years (if not decades) of career earnings in front of you. You need time to build up savings, investments and equity in your property. If your life and earning ability ends prematurely, life insurance can help adequately fill the financial gap.

Older people, however, may not always benefit from taking out a life insurance policy. They're likely to be more financially secure and have fewer people depending on them financially. Life insurance for older adults is also generally expensive relative to the amount of coverage. There are, however, some seniors who would benefit from a life insurance policy and may secure one with or without the traditional medical exam. 

Not sure if a policy makes sense for you? Get a free price quote here now to see what it would cost. 

Your budget

Different types of life insurance come with different costs. A whole life insurance policy has a cash value that's generally more appealing than a term life insurance plan. But term life insurance is often cheaper. 

Put aside what you want, for the moment, and do a realistic appraisal of what you can afford. A life insurance policy that you can't pay to keep long-term is not worth it. But a policy that offers cost-effective protection likely is. This can be important to remember as you review offers and policy options. 

Your goals

For some people, life insurance may be less about providing protection and more about meeting a financial goal. Perhaps you don't expect you'll be able to save up the equivalent amount that a life insurance policy offers, but you can afford to pay the premium for a policy in that amount. In that case, it may make sense to secure an insurance plan now.

Or maybe you want just enough to cover expenses in the event of your death (e.g. funeral and cemetery services). You may be able to qualify for an inexpensive plan that will provide enough money to do just that.

It's important to first know what you want your policy to accomplish. Then, you'll then be able to find the most valuable plan for your budget and your goals. In short: If a life insurance plan can meet your goals then it's probably worth pursuing.

How to decide if life insurance is right for you

There are a variety of factors that can help you determine when you need life insurance, how much you need, and how much you should pay. Ultimately, you should decide based on your personal financial situation and preferences. 

Many financial advisers recommend having at least some form of life insurance. If you don't have life insurance or want to overhaul what you do have, now is a good time to act. Get a free online price estimate today. Or use the table below to start comparing some top life insurance providers.