Life insurance is generally a necessity for your financial safety net if you have dependents like children or a spouse who would suffer financially if you were to die. Ask yourself, what would my family do to pay the mortgage or buy groceries if I were to die? Life insurance is meant to provide the funds for your family to have some financial security should they lose your source of income due to your death. But life insurance is not only for the breadwinner of a family. If your family includes a stay-at-home parent, for instance, consider what it might cost to replace the work he or she does for the household. If that spouse were to pass away would you need to secure daycare for your children? Would you need to secure household help? Could you afford these expenses based on your current income?

If you have no financial dependents, on the other hand, life insurance is probably not a necessary piece of your financial safety net, although many people also use life insurance as part of their estate planning and cash accumulation regardless of their dependent status.

If you plan to buy life insurance other than term life insurance provided by your employer, you should educate yourself about the pros and cons of the term, whole life, and other types of insurance. You may also want to talk to an adviser about how much insurance is enough. The Investment FAQ website explains how to determine your life insurance needs.