Life insurance can fill a wide variety of needs, including covering the finite years of a mortgage and protecting the interests of a special-needs child who will need financial support after you're gone.
In fact, although, 70% of Americans consider life insurance a necessity for themselves, 41% have no life insurance at all, according to 2017 statistics from the industry groups Life Happens and LIMRA.
Here's a guide to who needs life insurance and what kind of policy likely works best in each situation.
|How life insurance can help||Best option|
|Life insurance can provide "income replacement" so that your family can continue to pay everyday expenses.||Term life insurance can cover your working years.|
|Life insurance would cover the cost of paying for services the parent does for "free," such as child care.||Term life can cover the years your kids are young.|
|A policy could cover the support payments that a divorced parent makes.||Term life can cover the years of support payments.|
|Parent of a special-needs child|
|Life insurance can make sure the child will have financial support no matter when a parent dies.||Permanent life insurance provides a payout no matter when you die.|
|Homeowners with a mortgage|
|A policy can cover mortgage payments, so your family doesn't have to move if you die.||Term life insurance can match the years of a mortgage.|
|Someone with co-signed debt (such as student loans or credit cards)|
|Life insurance could cover the cost of the debt.||Term life can be timed to end with the debt payments.|
|High net worth individual|
|Life insurance can provide funds for heirs to pay estate or inheritance taxes.||Permanent life insurance is best for those with estate tax concerns.|
|Someone who wants to provide an inheritance|
|If you don't have a lot of wealth, life insurance can provide a small inheritance to heirs.||Permanent life insurance will pay money for the inheritance, no matter when you die.|
|Life insurance can pay off business debts if you die, help heirs to the business pay off estate taxes, or fund a buy-sell agreement that allows a business partner to buy out your share.||Term life or permanent life, depending on the issue to be solved.|
|Investor who has maxed out other retirement plans|
|Life insurance with a cash value component can provide a supplemental source of retirement savings.||Permanent life insurance, which builds cash value that you can access.|
|People concerned about paying for their own funerals.|
|Small life insurance policies can pay for your funeral and final expenses.||Permanent life, such as final expense insurance.|
The article A Guide to Who Needs Life Insurance originally appeared on NerdWallet .