Buying life insurance can be a smart thing to do, but the choice is not as simple as you might think. While many people need hundreds of thousands, or even millions of dollars, in life insurance coverage, others may need little coverage ‑ or none at all.

If you are thinking about buying life insurance, it is important to ask yourself some questions first. Here are some critical queries that will help you determine how much life insurance you might need ‑ of if you need any coverage at all.

Do I Have a Family?

The first question you need to ask yourself is whether or not you have a family to protect. Unlike other kinds of insurance, life insurance is not designed to protect you ‑ its purpose is to provide financial support to the people who rely on you and your income.

If you have a spouse and young children, buying life insurance becomes a no brainer, especially if you are the main breadwinner in the family. But if you are single with no dependents, it is much harder to justify buying life insurance. You can always buy a policy later ‑ after you meet the love of your life and have children.

How Much Employer‑Sponsored Coverage Do I Have?

Many large employers, and some smaller ones, provide life insurance for their employees as a basic fringe benefit. Before you call an agent, check your pay stub or ask your employer if you already have basic coverage.

This employer‑sponsored life insurance benefit may be limited, and it may not be enough to provide full protection for your family. In many cases the amount of coverage will be based on your salary, i.e. one or two times your annual earnings. Even so, this level of life insurance is something to build on, and having it could reduce the amount of additional insurance you need to purchase.

Is More Insurance Available Through My Employer?

If you do have life insurance coverage through your employer, you may be eligible to purchase more. Even better, you may be able to obtain the additional life insurance coverage you need at more favorable rates than you could get elsewhere.

Large companies may have access to less expensive forms of coverage, making the premiums more affordable. When you add in the fact that you can pay those premiums through a simple paycheck deduction, this option can be even more attractive.

Can I Self Insure?

This is not applicable to everyone, but for those with significant assets life insurance may no longer be a necessity. The idea of self insuring is commonplace among the affluent, applying to everything from healthcare to taking care of home repairs.

If you do have significant assets, you may be able to set your accounts up to protect your spouse and children, including the use of trusts, estate plans and other forms of protection. In many cases, these kinds of estate protection may be less expensive than buying traditional life insurance coverage.

Will I Need to Take a Physical?

If you do decide that buying life insurance is the right choice for you, the next question to ask yourself is whether and how you will qualify. When you do call an agent, ask about what the approval process will entail, including whether or not you will need to take a physical.

Some life insurance companies require all new applicants to take a physical, while others will waive the medical exam for certain forms of coverage. Either way, knowing what to expect will make getting the life insurance you need to protect yourself and your family a lot easier.

Life insurance can be a vital purchase, but it is not something that everyone needs. If you are worried about the well being of the ones you live, you can start by asking yourself the above questions so you can make a smart decision.