Do You Need Life Insurance? Start With These Questions

Name the person and the financial problem

Instead of beginning with a policy amount, finish this sentence: “I want money available for ___ so that ___.” A parent might name ongoing household bills. Someone living alone might name final arrangements. A caregiver might focus on paid help that a family would need.

Guardian’s consumer guide explains that the need for insurance depends on circumstances; not everyone has the same financial reason to buy it. Use your own household rather than a broad age-based rule. Guardian: Do You Need Life Insurance?

Separate short needs from long ones

Draw two columns on a sheet of paper. In the first, list responsibilities with an expected ending date, such as years of support while children grow. In the second, list costs you expect regardless of when death occurs. Do not force both lists into one number immediately.

Next to each item, note whether someone else would still need to pay it. This exercise helps you avoid counting the same expense in several places. It also makes a coverage conversation more specific than asking for the most insurance possible.

Three different answers can be reasonable

• Income supports another person: list the bills and years of support that would be affected; explore term life for a defined period.
• Only final costs remain: compare documented arrangements with accessible funds before considering final expense coverage.
• Resources already meet the need: you may have no additional insurance gap for that goal. Check who can access the funds and when.

These are decision examples, not recommendations based only on age or marital status. A person with no dependents may still have a final-cost goal; a person with dependents may already have adequate resources.

Count resources that are actually usable

List savings set aside for these needs and any applicable insurance benefits. Note who could access each resource and where the records are kept. A family may know that funds exist without knowing whom to contact or how to request them.

Do not count a household emergency fund twice: once for present emergencies and again as though it were untouched money reserved for final costs. Mark uncertain amounts as estimates. The purpose is an honest picture of the gap, not a worksheet that looks reassuring.

Turn the worksheet into questions

Bring the list to a licensed representative and ask which coverage duration and benefit amount address the identified gap. The NAIC’s buying guidance encourages assessing needs and choosing a premium commitment you can maintain. NAIC: Tips for Purchasing Life Insurance

For a hypothetical household with ample funds for final arrangements but years of dependent support remaining, those are different planning issues. For another household, the only identified gap may be final costs. Neither example determines your answer. Revisit your worksheet when the people relying on you, available funds, or responsibilities change.