How much life insurance do I need?

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This isn’t a question I asked myself until quite recently, when my husband and I started discussing how to best prepare for having kids, and what sort of financial goals we want to set for ourselves now that we’re really ready to do the family thing.

Naturally, I googled “life insurance”. The wealth of information (crowded with mysterious money jargon) that poured out at me resulted in an instant headache. “I’ll just come back to this some other time,” I told myself.

Just a week later, that time, I’m declaring, is now, because I’m very good at procrastinating important financial decisions and, as my paltry retirement fund reveals, delaying these decisions hasn’t worked in my favor.

I turned to financial planning experts to learn the basics of life insurance, how it works and when it’s a wise investment.

THERE ARE TWO TYPES OF LIFE INSURANCE PLANS: TERM AND PERMANENT

“There are two basic kinds, term and permanent,” says Sean Scaturro, director of life and health insurance advice at United Services Automobile Association (USAA).

“Term insurance is great for paying for the things you need to have paid for if you were to die during the next 20 to 30 years (the term of the policy),” he says. “Permanent insurance, like whole life or universal life, will pay for the things you want to have taken care of when you die, like funeral costs or leaving an inheritance. Permanent insurance will also gain cash value, similar to equity in a home that you can access over time.”

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