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Life insurance

Question: My husband and I are considering getting life insurance. We are 30 years old and we don't have kids but would like to have them in a few years. Our combined income is 150,000 and our only debts are our mortgage (350,000) and student loans (15,000-me, 40,000-husband). I've read in personal finance books that we should only consider term life insurance. Is that the case, and how do you figure out how much life insurance is right for you? Erin, Rockville, MD

Answer: There's really only one reason to buy life insurance: To financially protect our loved ones from our untimely death. Most of us realize we need life insurance when we have children. But I think it makes sense even for married folks without children to consider buying life insurance. It's a way of making sure that if one of you dies the other doesn't have to worry about money for a period of time. That's how I would start figuring out how much life insurance you need: How long do you want expenses to be covered to give the survivor some freedom? One benchmark is giving the survivor a year to deal with their grief without worrying about earning an income, paying down debts, or draining the savings account.

What kind of life insurance should you buy? I would go with "term" life insurance. Term is a pure death benefit. Premiums are cheap if you're in good health, although the cost of the policy does increase as you age. It's a simple product, easy to understand, and it allows for competitive comparison-shopping for the best mix of price and coverage. You'll want a low cost, plain vanilla policy from a blue chip, financially strong insurance company.

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