Learn about life insurance

• Why do you need life insurance?
• How much life insurance do you need?
• What is term insurance?
• How do you choose a company?

Why do you need life insurance?
Life insurance is an essential part of financial planning. One reason most people buy life insurance is to replace income that would be lost with the death of a wage earner. The cash provided by life insurance also can help ensure your dependents are not burdened with significant debt when you die. Life insurance proceeds could mean your dependents wouldn't have to sell assets to pay outstanding bills or taxes. An important feature of life insurance is that no income tax is payable on proceeds paid to beneficiaries.

How much life insurance do you need?
Before buying life insurance, you should assemble personal financial information and review your family's needs. There are a number of factors to consider when determining how much protection you should have. These include:

• Any immediate needs at the time of death
• Final illness expenses
• Burial costs
• Estate taxes
• Funds for a readjustment period
• Finance a move
• Provide time for family members to find a job
• Ongoing financial needs
• Monthly bills and expenses
• Day care costs
• College tuition or retirement

Although there is no substitute for a careful evaluation of the amount of coverage needed to meet your needs, most financial experts recommend carrying life insurance coverage equal to five to seven times your annual take-home pay to help protect your family's financial security. Your individual financial situation may require more or less insurance than this suggested amount, to cover personal debts and fund other expenses.

Here's a tool to help you determine how much coverage you need.

What is term insurance?
Term insurance provides protection for a specific period of time. It pays a benefit only if you die during the term. Some term insurance policies can be renewed when you reach the end of a specific period, which can be from one to 20 years. At the end of a renewal period, rates are usually adjusted to your current age and amount of insurance.

How do you choose a company?
More than 2,000 companies in the United States sell life insurance. Most sell policies through agents or brokers, although some companies offer policies by mail or the internet. Before purchasing a policy, check the company's financial condition. Ask the agent or request information from your state's insurance department. A number of insurance rating services rate the financial strength of companies. These ratings can be found in public libraries.

Minnesota Life ranks among the most highly rated insurers in the country. Check out Minnesota Life's financial ratings.

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