The first factor that you must keep in mind here is very basic; the very purpose of life insurance is to act as a replacement for your income and support to your family in the event of your death. A typical figure can be arrived at by calculating how much your salary would accumulate to over a period of five to seven years. This figure will rise significantly if you happen to have a young child/children or if you are reeling under a significant amount of debt.
Just because you get a whole life policy does not mean you are completely insured; whole life policies come with an investment component, making the premium payments on them much more expensive than on a term insurance policy. At the other end of the spectrum, getting yourself the least possible insurance cover completely defeats the purpose of insurance – to cover your dependents.
You also need to figure out for how long you are going to need insurance. You can do this by estimating how long your children are going to need your support or for how long you would want to cover your spouse for your lost income in case of your untimely death. The older you get, the more insurance is going to cost you – keep that in mind. The maximum age you are advised to insure yourself up to is around 65. Insurance in your seventies might be next to impossible. Insurance is not substitute to your retirement plan; it should be an added benefit.
Also remember that the cheapest insurance rates go to those who enjoy good health. If you smoke, take heart medication, are involved in a risky job or are obese, be prepared to pay higher rates. The best you could do in such a situation is to shop around and choose what works out most economical for you.
