ArcaMax

September is Life Insurance Awareness Month, an opportunity to discuss the very un-sexy, but essential topic.

The core concept is easy: You agree to pay a certain amount of money to a company, in exchange for the company's obligation to pay out a lump sum of money to your designated beneficiaries in the event of your death.

But many get tripped up by the details, which is why it’s time to peel back the layers and help you get on track with one of the core aspects of a financial plan.

Life insurance starts with an obvious hurdle: It is an emotional issue because it forces us to contemplate the impact of death on our loved ones. But NOT dealing with it or pushing it to the back burner is not going to make it any easier. In fact, the longer you wait, the more expensive it might get. So, let’s dive in!

To understand if you need coverage, ask yourself a basic question: If I were to die now, would anyone suffer financially?

If the answer is yes, you must determine the amount of coverage that you need. Rules of thumb do not work well for this topic because the size of your family, and what you want to cover, varies dramatically.

For example, some people want life insurance proceeds to cover ongoing living expenses and the payoff of debt, while others may also want to include future college costs for kids or a surviving spouse's retirement needs.

To pinpoint the coverage amount, go online to lifehappens.org and use their free calculator. You will be prompted to plug in the variables that apply to you, like how much money you spend monthly, how much you have already saved, how much coverage is already in place, and the amount of debt you want to pay off.

Once you determine the amount, it’s time to figure out the type that works for you. Most people have a specific insurance need for a defined period, which is why term life insurance is the go-to coverage.

Here’s how it works:

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