Life insurance plays a critical role in providing financial security for one's family. While life insurance policies are an excellent idea for many working adults with families, not everyone will need the same level of coverage. The following guide provides simple tips and tricks for determining how much life insurance one needs.

Life Insurance and Age

Most life insurance policies are designed to protect a family if the primary income source dies. While life insurance can be a great choice for younger couples with children, it may not be as necessary as one ages. In addition, life insurance premiums can vary significantly based on health and age.
For example, it's a good idea for a younger couple with children to have life insurance for the primary earner. If a family has dual income sources, it can still be a good idea to purchase life insurance for both working parents. Without life insurance, one of the parents may end up in financial trouble.

Older Families and Life Insurance

However, older families without dependent children may not need life insurance. While lots of younger families don't have much in the way of savings, older families will often have several savings accounts and investments. In the event of a death, these can be used instead of a life insurance policy. Since an older couple will not have dependent children, there may not be a need for supplemental life insurance.
However, life insurance can be valuable if an older couple has very little liquid capital. If all of a family's assets are tied up in property or other goods, it can be difficult to manage a significant loss of income. In many cases, it will require a family to sell goods or property. For older couples with minimal savings, life insurance can be an excellent way to protect a spouse.

Working Professionals and Life Insurance

When determining how much life insurance one needs, it's essential to determine what one's potential income would be up to retirement. For example, a 30-year-old dentist with a 30 year career in front of him or her will need a high level of insurance. For working professionals, it's a good idea to set one's life insurance policy at one's estimated maximum earnings during life. For a doctor or dentist, this will be over two million dollars. In some cases, it may be a good idea to purchase a life insurance policy as high as five million dollars.

A life insurance policy should be based on the quality of life one wants for his or her family. While a family of four can survive on $50,000 a year, this level of income will not allow for lots of luxuries. In addition, it will not be able to protect a family in the event of unexpected costs or bills.

Unexpected Costs and Life Insurance

It's also important to make sure that a life insurance policy can pay for a potential mortgage, student loans and other bills. If a home is co-owned between a wife and husband, that property may be used as collateral in a loan. For example, many doctors, lawyers and other medical professionals leave school with over $400,000 in debt. If one dies, the estate may be responsible for these costs.

It's essential to have enough life insurance coverage to maintain a family's quality of life and happiness. However, each family should consider their own needs when considering which policy to choose.

Clayton Lawrence is a personal finances guru and freelance blogger forwholetermlifeinsurancequotes.org, a site he often recommends for getting free life insurance quotes.