Many financial experts consider life insurance to be the cornerstone of sound financial planning. Get a free life insurance quote today from InsuranceFusion.com. It is generally a cost-effective way to provide for your loved ones after you are gone. It can be an important tool in the following ways:

1. Income replacement
   For most people, their key economic asset is their ability to earn a living. If you have dependents, then you need to consider what would happen to them if they no longer have your income to rely on. Proceeds from a life insurance policy can help supplement retirement income. This can be especially useful if the benefits of your surviving spouse or domestic partner will be reduced after your death.
   
2. Pay outstanding debts and long-term obligations
   Consider life insurance so that your loved ones have the money to offset burial costs, credit card debts and medical expenses not covered by health insurance. In addition, life insurance can be used to pay off the mortgage, supplement retirement savings and help pay college tuition.
   
3. Estate planning
   The proceeds of a life insurance policy can be structured to pay estate taxes so that your heirs will not have to liquidate other assets.
   
4. Charitable contributions
   If you have a favorite charity, you can designate some of the proceeds from your life insurance to go to this organization.
   

Source: Insurance Information Institute, Inc. www.iii.org

To decide how much life insurance to buy, you need to first figure out what your goals are in purchasing this life insurance coverage and get a life insurance quote. Ask yourself the following:

• Do I want to spare my loved ones funeral costs and outstanding debts? 

• Am I concerned that my spouse or domestic partner will not be able to continue to pay off the mortgage if I die suddenly? 

• Do I have dependents who count on my income? 

• Am I concerned about college savings for my children or retirement savings for my spouse if I die suddenly?
  

While all situations are different, here are two scenarios to help you think through the questions you should pose to your life insurance professional:

Dependents

If you have children, a spouse who does not work outside the home or aging parents who you financially support, you have dependents. Alternatively, you may simply have a spouse or domestic partner who would be unable to pay the mortgage without your financial contribution. In either case, your loved ones will no longer have your income to help them pay the bills and maintain their lifestyle after you are gone. You will have to purchase enough insurance to provide for their future, while considering how much of your budget should be devoted to life insurance.

Some insurance experts suggest that you obtain a life insurance quote that is five to eight times your current income. While this may be a good way to begin estimating your family's needs, you will also need to figure how much your dependents will need to pay for some or all the following:

• Cost of owning a home (mortgage, maintenance, insurance, taxes and utilities) 
• College savings 
• Food, clothing, utilities 
• Child care 
• Nursing home or elder care 
• Retirement savings 
• Funeral expenses and estate taxes