Considering buying life insurance? 4 questions to ask yourself

Life insurance coverage is an important type of insurance protection but not every American has a policy. In fact, according to research from PolicyGenius, just 54% of American adults have life insurance. This includes 27% who only have group coverage, which is provided by employers and often insufficient to provide full protection.

While many Americans need life insurance, some are reluctant to buy because finding a policy seems confusing and it's not a fun subject to think about. Still, it's important to get covered to ensure your loved ones are cared for.

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1. What are the benefits of having life insurance?

The biggest benefit to buying life insurance is that you can provide for and protect the people you care about — even if you pass away.

Chances are, your spouse or other family members depend on you for something. This could be providing income, taking care of the house or providing care for aging parents or children.

If you pass away, life insurance provides the money to replace your income or to pay for the services you were performing. It's intended to ensure the living standards of your loved ones don't see a marked and permanent decline as a result of your death.

2. What does it cost to have?

The costs of life insurance vary depending on what kind of policy you buy, the age when you get coverage, your health status, the amount of insurance coverage you buy and what insurer provides your policy.

Term life coverage tends to be much more affordable than whole life coverage. And as for age, you'll likely get a lower premium if you buy a policy when you're younger. Your credit score also affects your insurance rates, with lower premiums being one of the many benefits of having a good score.

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3. How much coverage is enough?

When shopping for life insurance, you have to decide how much protection to buy. Specifically, you'll pick how large your death benefit should be. That's the amount of money the insurer will pay to your chosen beneficiaries if you pass away while the coverage is in effect.

Policies can come with very small death benefits that are just enough to cover funeral costs. Or you could buy a plan that pays out $1 million or more if you pass on. Generally, financial experts recommend buying 10 to 15 times your annual income in coverage. If you make $50,000, you'd have a $500,000 to $750,000 policy.

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4. What kind of coverage do you have from work (if any?)

In many cases, employers provide life insurance as a workplace benefit. But just because you have coverage at work, don't assume that's all the protection you and your loved ones need.

Policies that employers provide often have a low death benefit. For example, your family may receive only $10,000 or $20,000 if you pass — well below the recommended 10 to 15 times your income.

Policies from employers also typically remain in effect only as long as you keep your job. They're usually not portable so you can't take them with you. This could be a problem if you leave your job because you will no longer have protection for your loved ones.

While you might be able to buy a policy from a private insurer after losing employer-provided coverage, doing so could be more expensive than if you'd purchased private coverage at a younger age. Or you may find that buying a policy is out of reach if you had pre-existing health problems at the time you left your job.

As a result, if you have a workplace plan, it's a good idea to shop for additional coverage on your own. And for those with no protection at all, buying coverage should be a top financial priority if your loved ones rely on you.

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