How Much Life Insurance Do I Need?

Life insurance is one of the most important products we must acquire in our lives because it is the way to protect the family in the event of our death.

In this article, we will address all the issues surrounding life insurance and give you some tips on how to choose the best one.

What is life insurance?

Life insurance will pay a certain amount of money to the beneficiary, in case the insured (the person who bought the insurance) dies.

In order to purchase insurance, you need to pay a premium that will be a small fraction of the total amount covered by the insurance.

In other words, if your insurance policy is one million dollars, you will pay a premium of five thousand dollars, ten thousand dollars, one hundred thousand dollars, etc. (varies depending on the health and age of the applicant).

Why do I need life insurance?

Life insurance is a way to give your family living in case you die.

Without it, your loved ones will face your loss and a difficult financial situation, especially if you are the only person who contributes income to the household.

They are also important because in some cases it covers the risk of disability.

In other words, if you can’t keep doing your daily work, life insurance will either pension you for the rest of your days (depending on the policy) or pay you the amount of the policy.

For these reasons, they are very important and should be taken out from an early age to avoid leaving the family unprotected.

How to choose life insurance?

In the market, there are a lot of different options with different prices that vary according to the degree of coverage they offer.

When choosing insurance you should pay attention to the following:


It’s important to know when they will work. You have to choose one that fits your lifestyle.

That is to say if we smoke it is necessary that the insurance policy stipulates that the information is already known and that any illness derived from this habit is covered.

Premium price:

It is important to choose life insurance at the lowest cost.

However, it should cover those risks to which we are exposed on a daily basis.

At this point, it is important to contrast the coverage with the price and make a comparison.


In addition to the previous point, the term is also fundamental to determine which one to buy.

Generally, terms have an annual renewal, although you should always check it.


Knowing in which cases our insurance will not cover us is very important in determining which package is best for us.

At this point, it is advisable to choose the insurance with the least restrictions.

As you can see, the above data must be analyzed together to determine which one is best suited to our needs.

It is also important to emphasize that in these cases choosing the cheapest insurance is not always the best option, it is necessary to decide to take into account all that it offers us and its conditions.

Otherwise, we might run out of coverage at a difficult time, as the cheapest is usually the insurance that offers the least coverage.

What parts make up a life insurance contract?

Life insurance is made up of the insured, the insurer, the coverage, the beneficiary, the amount of money and the premium:

  1. Insured: It is the person who acquires the life insurance and, therefore, the one who is insured.
  2. Insurer: The financial or banking entity that will be in charge of covering all the conditions of the contract.
  3. Coverage: It stipulates the cases in which the insurance will be applied, as well as the exceptions and responsibilities of the insured.
  4. Beneficiary: Is the person who will receive the amount of money agreed in the insurance if the insured were to die.
  5. Amount of money: This is the amount for which the beneficiary is insured in the event of the insured’s death.
  6. Premium: The amount of money that must be paid monthly, bimonthly, quarterly, semi-annually or annually to the insurer in order to continue to receive life insurance benefits.

Basically, these 6 points are the most important points of a life insurance contract. Whenever you contract an instrument of this type, you should read and analyze the coverage section and the premium in-depth.

This way, you will know under which conditions your life insurance is effective and under which it is not.

Types of life insurance

In the case of life insurance we can find two types:

Temporary insurance

  • This life insurance covers the insured’s death if it occurs prematurely before the contract expires. 
  • Generally, this type of insurance gives a higher value to the risk than to other aspects. 
  • Although there are different durations and you can even negotiate personal life insurance, in most cases its duration is annual and has a renewal limit.
  • The advantage of this type of insurance is that it allows you to contract a very high coverage with the payment of the premium too low.

Whole life insurance

  • This type of insurance, unlike the previous one, stands out because it ensures people permanently without a specific term. 
  • In other words, you will be insured for the rest of your life.
  • The payment of the cover is made to the beneficiary just after the death of the insured.
  • In some cases, we can find this instrument with the option of capital restitution. This means that the insured will receive all the premium payments he has made if he reaches a very high age.

As you can see, life insurance can cover you temporarily and permanently under different conditions. Choose the one that suits you best!

Life insurance and mortgage

Life insurance is also widely related to the mortgage system, as it is the backing and one of the fundamental instruments that prevent debts from being inherited.

Surely if you have applied for a mortgage, quoted or made a credit simulation you have already noticed that there is a life insurance section in the amortization, which you have not even chosen.

This section is obligatory (required for credit) and necessary since mortgage life insurance will cover the amount remaining from your mortgage in the event of your death.

The insurance will be responsible for the debt, leaving your family free.

For this reason, acquiring insurance is very important, especially if your mortgage is in common.

However, you should not legally take out the insurance that the bank or financial institution where you apply for the mortgage is selling you.

You can look for other life insurance options on the market.

So, before acquiring the obligation and signing the contract, it’s best to consult with a professional and choose a low-cost mortgage life insurance with broad coverage.

In these cases, we also recommend that you take out a life insurance policy that includes situations of illness or disability.

In this way, your debt will be settled if you fall ill or suffer an accident that prevents you from working.

Advantages of having life insurance

Life insurance is not a luxury. On the contrary, it is a necessity for your loved ones to be covered for any eventuality.

Among its main advantages we can find:

Protect your family:

Insurance will leave enough money to your loved ones so they can get ahead and have no financial problems in the future.

Thanks to this, if you are absent when your children are small, they will be able to have that money to continue their studies, feed themselves, dress themselves, etc. You will cover them for a long time and they will be able to succeed.

Pay outstanding debts:

The insurance covers debts in some cases such as mortgage payments.

Thanks to this, it leaves your family without the obligation to continue with monthly payments that can represent a very heavy burden.

Also, in the case of the mortgage, the insurance guarantees that your family will have a home and a roof over their heads.

Disability coverage:

Some insurance covers you in case of accidents or illness (check the policy). In this way, even if the insured does not die, he or she will receive a pension or a payment for the full amount of the insurance.

Adaptive premium payments:

Life insurance has evolved a lot in recent years, which is why it has developed financing plans that allow you to stay insured by making periodic and small premium payments.

In the End

Without a doubt, the advantages of insurance are many.

Not only does it give us peace of mind knowing that someone will support our family in case we miss out, but it also has small monthly payment plans.

Now that you have a better idea of how to choose life insurance, make sure to review all details and make a plan to get the one that better fits your needs.

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