Some years ago, a television commercial poked fun at the extremes to which people go in order to avoid insurance salespeople. One scene in that commercial showed a funeral home worker lying down in a casket and closing the lid when the salesperson approached.

Of course, the situation was exaggerated for the sake of humor, but the truth is that most of us really don't enjoy talking about insurance, particularly life insurance.

Buying life insurance forces us to recognize that we won't live forever, and some people seem to think that if they talk about dying it will happen to them. But, to my knowledge, talking about dying never killed anyone.

Another reason people may avoid discussing life insurance is that they don't know a lot about the subject. If that description fits you, let's take a quick look at some insurance basics.


Life insurance basics

There are two major types of life insurance: term and whole life.

Term Life
  • If your money is tight, term may be your best choice.

  • Term is purchased for a set period of time, five years, ten years, and so forth.

  • As you grow older the cost of term increases because the potential for death increases, and so does the potential for a claim.
Whole Life
  • Whole life insurance usually has a monthly or yearly fee that starts out higher than a term policy, but it does not increase with age.

  • As you pay into the policy, it accumulates a cash reserve, which is used by the insurance company to offset payments at a later time.

  • This type of insurance is purchased for your entire lifetime. That's why it's called "whole life."
Whether you determine that term or whole life is best for you, when you decide to purchase a life insurance policy be sure to shop around; premiums can vary tremendously for the same coverage.

Think about this
  • Your insurance policy should take into account your lifestyle, which means you'll come out cheaper if you're living healthier.

  • You also can save money by purchasing life insurance through a group plan, and medical exams may be waived.

  • As the years pass, consider adjusting the amount of insurance you carry at significant stages of your life.

  • For young couples, one of those "significant stages" begins when the family size increases and living expenses go up. Therefore, couples may want to consider increasing their coverage to ensure that survivors won't endure hardship if a wage earner dies.
How much insurance is enough?
How do you know the amount of coverage you need? There are many variables within each family that must be considered.
  • Age of the children.

  • Spouses' income capability.

  • Existing debts.

  • Current lifestyle.

  • Sources of after-death income other than life insurance.
One method to help you evaluate how much insurance you need is based on present income and spending. Hopefully, you have your spending under control, live on a budget, and know how much money is coming in and how much is going out.

If that's the case, and you have a good idea of how much money it takes for your family to get by, you can use that figure to determine how much life insurance you need.

Always remember that as God provides for us, He admonishes us to provide for the needs of those in our families. For the head of a household, this is not limited to life alone but extends to providing even after death. "If anyone does not provide for his own, and especially for those of his household, he has denied the faith and is worse than an unbeliever" (1 Timothy 5:8).