Determining Your Policy's Value
So, exactly how much life insurance you should buy? There's no set dollar amount. You should definitely make sure you won't be underinsured so that your family is covered for as long as they need. Insurance agents will usually tell you to buy anywhere from 10 to 20 times your annual income, and specifically determining what the monetary value of your insurance policy should be is based on a several factors -- your salary, the age of your dependents, other assets that they may use to live on and if you have an employed spouse.
Next, you need to determine how long you'll need your policy. With term life insurance, the general guideline is to purchase coverage to get your youngest child to about age 22, when most young adults begin supporting themselves. Remember, life insurance gets more expensive as you age, so if you're buying insurance in your 30s, you'll be paying a lot less than if you try to buy a policy in your 60s. If you want to cover your spouse in your insurance plan as well, plan on having coverage until your spouse reaches retirement age.
Regardless of the policy you choose, if you don't pay your insurance premium on time, your insurance will be cancelled, and you may have to start the process over again.