People who should have it:

• People with kids

• People with disabled siblings or destitute parents who rely on them for financial support

• People with spouses that do not work

• People who are married, don’t have kids and want to give their spouse the financial freedom to mourn

People who shouldn’t have it:

• People who aren’t married and have no dependents

• People who are married, both work and have enough savings to shield a surviving spouse from financial peril in the event of a death

• Kids (unless they’re child actors or do something else that contributes a lot to the family budget)

Sorting out how much life insurance you need is a little like figuring out how much long-term disability insurance to buy. It’s income replacement, except the person whose income you’re replacing no longer needs to be supported (because they’re dead). Instead, it’s just the survivor who may need financial help.

But how much help might they need? And for how long? To figure this out, you’ll need to answer a few things:

• How much money does the insured person take home (after taxes, since this is what insurance would be replacing – life insurance proceeds are not taxed)

• How much money does the spouse who would be the survivor earn? How much could they earn if they needed to work (and support surviving children?)

• For parents raising children alone with no other parent in the picture, who would take the children in and would their guardians need financial assistance?

• How much money is in savings, whether it’s immediately accessible or in retirement accounts?

• What would the surviving spouse need to retire comfortable someday?

• Do you want the life insurance proceeds to pay off any outstanding mortgage?

• Do you want the life insurance proceeds to pay for the college costs of the surviving children?

You can see where this starts to get confusing. Plenty of people throw up their hands and simply attempt to replace five or ten years of their income with a term life insurance policy. That's much better than doing nothing. This basic calculator will help you get at this number. This more complicated calculator takes future expenses like living costs, educational costs, and medical bills into accont.