If someone will suffer financially when you die, chances are you need life insurance because it provides cash to your family after your death.

This cash, known as the death benefit, replaces your income and can help your family meet many important financial needs like funeral costs, daily living expenses, and college funding. In addition, there is no federal income tax on life insurance benefits.

To help you understand how life insurance might apply to your particular situation, we’ve outlined a number of different scenarios below.

You’re Married

Many people mistakenly believe they don’t need to think about life insurance until they have children. This is not necessarily true. If you or your spouse dies unexpectedly, would there be enough money to pay off debts like credit card balances and car loans and cover the monthly bills such as utilities, mortgage or rent? If you’re planning to have children, you may want to buy life insurance now instead of waiting until you are pregnant as some companies may not issue policies during pregnancy.

You’re Married With Kids

Most families depend on two incomes to make ends meet. If you died suddenly, could your family continue to meet all of their financial obligations — from paying rent or a mortgage to daily living expenses? Could your family continue their standard of living on your spouse’s income alone? Would their plans for the future — like college stay intact? Life insurance can help make sure your plans for the future can continue.

You’re a Single Parent

As a single parent, you’re the caregiver, breadwinner, cook, chauffeur and so much more. With so much responsibility resting on your shoulders, you need to make doubly sure that you have enough life insurance to safeguard your children’s financial future.

You’re a Stay-At-Home Parent

Just because you don’t earn a salary doesn’t mean you don’t make a financial contribution to your family. Childcare, transportation, cleaning, cooking, and other household activities are all important tasks, and the replacement value of which is often severely underestimated. With life insurance, your family can better afford to make the choice that best preserves their quality of life.

You Have Grown Children

Just because your kids are through college and the mortgage is paid off doesn’t necessarily mean that you no longer need life insurance. If you died unexpectedly, your spouse will still be faced with daily living expenses. Would your financial plan, without life insurance, enable your spouse to maintain the lifestyle you’ve worked so hard to achieve now and into retirement?

You’re Retired

Depending on the size of your estate, your heirs could be hit with a large estate-tax payment after you die. The proceeds of a life insurance policy are payable immediately, allowing heirs to take care of these taxes, funeral costs and other debts without having to liquidate other assets, which may occur at a fraction of their value. Life insurance proceeds are also generally income tax free and won’t add to your estate tax liability, if properly structured.

You’re a Small-Business Owner

Besides taking care of your family, life insurance can also protect your business. What would happen to your business if you, one of your fellow owners, or a key employee died? Life insurance can help in a number of ways. For instance, a life insurance policy can be structured to fund a buy-sell agreement. This would ensure that the remaining business owners have the funds to buy the company interests of a deceased owner at a previously agreed upon price. To protect a business in case of the death of a key employee, key person insurance, payable to the company, provides the owners with the financial flexibility needed to either hire a replacement or work out an alternative arrangement.

You’re Single

Single people may think they do not need life insurance, but there may be exceptions. For instance, some single people provide financial support for aging parents or a sibling with special needs. Others may be carrying significant debt that they wouldn’t want to pass on to family members who survive them. Insurability is another reason to consider life insurance when you’re single. If you are young, healthy, and have a good family health history, you may be eligible for a more affordable life insurance rate.

Determining how much life insurance you need requires an examination of your current and future financial obligations, along with the resources your family could tap.

Your future obligations are a combination of what it would cost to help your surviving family members meet immediate and ongoing needs like funeral costs, taxes, food, clothing, utilities, mortgage payments, and your future obligations like college and retirement funding.

The resources that your surviving family members could draw on to meet those obligations include your spouse’s or partner’s income, savings and investments, other income producing assets, and any life insurance you might already own.

The difference between the two—your financial obligations minus the resources your family has to meet those obligations—is the approximate amount of additional life insurance you need. If this sounds confusing, you’re not alone. That’s why most people turn to a qualified, licensed insurance professional when they want to figure out how much insurance they may need.

If you don’t feel you’re ready to speak with an agent or if you want a preliminary sense of your insurance needs before meeting with an agent, visit our Life Insurance Needs Calculator. This tool will walk you through the various questions you need to ask yourself and provide you with a rough estimate of how much life insurance you may need to protect your family.

It’s impossible to say, because the kind of coverage that’s right for you depends on your circumstances and financial goals. But, generally speaking, term offers the greatest coverage for the lowest initial premium and is a great solution for people with temporary needs or a limited budget. Permanent insurance may make more sense if you anticipate a need for lifelong protection, or if the option of accumulating tax-deferred cash values is attractive to you. Also, it doesn’t have to be one or the other. Often, a combination of term and permanent insurance is the right answer.

The only way life insurance companies can offer coverage at affordable rates is to carefully review your application and health information and decide if you should be approved for their product as well as assign a rate class that matches your health profile and establishes your premium.

To help them do this, you must complete a full application that captures detailed information about you and your health. Most likely, you’ll also need to complete a brief medical exam to confirm the information in your application. The exam is done with an examiner who is paid for by the insurance company and can be completed at your home, office, or the examiner’s office during a time that’s convenient for you.

Once the insurance company has both your application and exam results, they review your information to confirm your qualification and determine how much you should pay. This review typically takes 2-8 weeks, depending on your insurance company.

Here’s the typical process for applying for term life insurance online at the most competitive rates available (note: a licensed life insurance professional is always required to be part of the process).

1. Shop Rates & Request Application. You should start by visiting a site that offers estimated rates from multiple carriers. When visiting multiple quoting websites, the rates for a specific life insurance company should be identical on all sites. Although the rates should be the same, the selection of life insurance companies that are offered on each site may vary from one to many. Once you find a policy that is right for you, most sites allow you to request an application, at which point a licensed life insurance professional will call you to answer questions and start your formal application.
2. Application. Complete and sign your entire life insurance application. Use this checklist to help gather additional information your life insurance company may need about you and your health.
3. Medical Exam. Complete a brief medical exam to confirm your health. The exam is done with an examiner who is paid for by the insurance company or licensed insurance professional and can be completed at your home, office, or the examiner's office during a time that's convenient for you. View tips.
4. Review. Wait for your insurance company to review your application and medical information to confirm qualification and rate. This review typically takes 2-8 weeks, depending on your insurance company.
5. Approval. Once the insurance company has approved your application, your policy will be delivered to you, along with any additional requirements needed, in order to activate your coverage.
6. Free-Look Period. Most policies offer a Free-Look period.