Your Guide to Choosing Life Insurance

family

Life is full of unexpected events. The key is to plan and prepare for them before they happen. Life insurance is one way to do that. But how much coverage do you need and which type? We can help you figure it out.

How much do you really need?

There are 3 easy ways to find out:

  1. For a quick estimate: Calculate 7–10 times your current salary.
  2. Want more detail?: Use our Life Insurance Needs calculator, or "L-I-F-E," as a guide to calculate your:
    • Liabilities (like your mortgage, car loans, credit card, etc.)
    • Income needs for your family to replace your future salary and cover ongoing living expenses, savings needs and an emergency fund
    • Final expenses
    • Education expenses for your child or children
  3. Talk to a professional: An Edward Jones financial advisor can look at your entire financial picture and goals, and help you choose the right amount of coverage. You don't want to pay for more coverage than you have to and, even more importantly, don't want your coverage to fall short when your family needs it.

Needs change over time

If you're young, raising a family and paying a mortgage, you might need more coverage. As you pay down your debts, coverage needs may decrease, or you might want to use life insurance as an investment tool. Throughout different stages of your life, your coverage needs change. That's why it's important to review your policy every few years and whenever you have a life event, like the birth of a child, a marriage or a divorce.

Term or perm?

There are two types of life insurance: term and permanent. How you choose between them depends on how long you'll need the insurance and what you want to spend.

  • Term insurance - Term covers a specific time frame—usually 20 years or less. It's the most affordable type of life insurance, making it a great choice if you still have kids in the home and you're paying a mortgage. When the term is up or you stop paying the premium, the coverage ends.
  • Permanent insurance - Permanent insurance covers your entire lifetime and can be used as an investment tool because you can actually build up cash value in the policy. It's also more expensive than term insurance.
Term
Perm
Premiums are affordable but can rise with age
Premiums are usually level, don't increase with age
Covers 20 years or less
Offers lifetime protection
No cash value
Cash value grows over time, tax-deferred
Rates can increase, depending on age and health
Insurability is guaranteed under the contract
Death benefits pass to beneficiary free of federal income taxes
Death benefits pass to beneficiary free of federal income taxes

What's next

Once you've calculated how much life insurance you need and which type would work best for you, all that's left to do is purchase a policy. It's an important decision and one that should be made as a family. Start having those conversations with yours. With the right coverage in place, you can relax knowing you have a cushion for one more of life's "what ifs."

Important Information:

Edward Jones operates as an insurance producer in California, New Mexico, and Massachusetts through the following subsidiaries, respectively: Edward Jones Insurance Agency of California, L.L.C., Edward Jones Insurance Agency of New Mexico, L.L.C., and Edward Jones Insurance Agency of Massachusetts, L.L.C.

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