4 Life Insurance Questions to Protect Your Family
January 6, 2026
Life insurance can provide a tax-free safety net for your family if something unexpected happens. And yet 42% of individuals put it off often because there always seems to be a more urgent financial priority.
If you’ve been meaning to revisit life insurance but haven’t found the time, here’s the good news: you can make meaningful progress in 5–10 minutes by walking through four simple questions.
1. Do I need life insurance?
Start here: Does anyone rely on you financially or for caregiving? If the answer is yes, life insurance is worth considering as part of your family’s protection plan.
Dependents can include:
A spouse/partner who relies on your income
Children (and future education goals)
Aging parents or relatives you support
Anyone relying on your caregiving (including a stay-at-home parent—care has real replacement costs)
Small scenario: If your income stopped tomorrow, could your household still cover the basics: housing, childcare, groceries, and bills—without major disruption?
Action step: Write down who depends on you and what would need to be replaced (income, childcare, household management, etc.).
2. How much life insurance do I need?
There are a lot of ways to estimate coverage, but two common starting points are:
Option A: Needs-based planning
This approach focuses on the costs you’d want covered if you weren’t here.
Consider items like:
Mortgage/rent and other debt
Childcare and day-to-day living costs
A set number of years of income replacement
Education funding goals
Final expenses
Then subtract accessible assets your family could realistically use (often checking/savings + brokerage accounts; retirement assets may be less “accessible” depending on age/taxes).
Option B: Income replacement (quick estimate)
A rough method is to convert income into a “replacement portfolio” using a withdrawal-rate assumption (the example uses a 4% withdrawal rate).
Illustration (simple math example):
Gross income: $100,000
Assumed tax rate: 22% → net income ≈ $100,000 × 0.78 = $78,000
$78,000 ÷ 0.04 = $1,950,000 of coverage (ballpark)
(This is a starting point, not a one-size-fits-all recommendation: taxes, spending needs, years to cover, and existing assets all matter.)
Most people don’t realize: Your insurance need usually isn’t “forever.” It often decreases as debts decrease, savings grow, and kids become independent.
Action step: Choose one method (needs-based or income replacement) and write down a rough range (ex: “$750k–$1.25M”) instead of trying to land on a perfect number today.
3. What coverage do I already have?
Before you buy anything new, review what’s already in place. Many employers provide basic coverage (often 1–3× salary), but that may not be enough, and it may not follow you if you change jobs.
Look for:
Employer-provided group life insurance amount
Any personal policies you’ve purchased outside work
Coverage on both spouses/partners (even if one income is smaller)
Then compare your current total coverage to the amount you estimated in Question #2.
Action step: Gather your benefits summary and any policy declarations pages. Write down:
Coverage amount
Policy type (term/permanent/group)
Beneficiaries that are listed
4. What type of policy fits my goal?
The most common policy types are term, universal life, and whole life.
Term life insurance
Typically, the most cost-effective
Covers a set period (often 10, 15, 20, or 30 years)
Designed to protect against “high-need years” (young kids, mortgage years, income replacement, education funding goals)
Permanent insurance (whole life / universal / variable / indexed universal)
Permanent policies can have a role in specific planning situations, but they’re more complex and typically more expensive.
They’re sometimes considered for:
Certain estate planning needs
Special needs planning
Situations where lifelong coverage is a priority
If you’re exploring permanent coverage, it’s smart to work with a qualified professional and ask for clear comparisons.
Questions to ask when getting quotes:
What problem is this policy solving (income replacement, lifelong dependent, estate goals)?
What are the premiums, guarantees, and tradeoffs?
What happens if we stop paying early?
Can we compare term options alongside permanent options?
Action step: If your main goal is to protect your family through specific years (kids, mortgage, income needs), start by pricing term coverage for the period you want to protect.
Don’t forget your beneficiaries (quick final check)
Beneficiaries determine who receives the life insurance proceeds—typically tax-free—and it’s easy for these to become outdated.
Good habits:
Review beneficiaries every year or two
Add a contingent beneficiary (backup)
Action step: Log in today and confirm your beneficiary designations match your current wishes.
You are not alone, talk with a Clarity Point Financial advisor
