If you have dependents—or just loved ones who you want to take care of after you die—life insurance is critical. This coverage helps ensure your lost income doesn’t translate to tangible material losses for your family once you’re gone.
But how much life insurance is enough? That’s a question whose answer can change significantly over your lifetime, and an important one to answer correctly.
You may be underinsured with life insurance coverage if…
1. Your only life insurance coverage is through your employer.
While some life insurance is certainly better than no life insurance, if your only coverage is through your employer, you may not have enough. These plans generally offer very limited coverage (like a year’s worth of your salary, maybe two), which is unlikely to be enough to meet your family’s needs if you have any significant debts or children whose college educations you’re hoping to help fund.
Furthermore, life insurance offered through your employer is usually contingent on you keeping that job, so if you leave your position for any reason, the coverage disappears.