The One New Year’s Money Resolution You Can Keep

Editor’s note: This is a guest post from Policygenius.

If you’re focused on getting your finances to a good place in 2018, buying something new seems like a strange way to achieve that goal. There’s reason to do it, though — namely to ensure your loved ones are covered financially in case something happens to you.

That’s right, we’re talking about getting a life insurance policy. Stick with us here — life insurance rates are lower than they’ve been in 20 years, so it seems silly to pass up a deal like this. After all, you wait until there’s a sale to go make a big-ticket purchase so you can save on something you’d be buying anyway, right?

Plus, the younger you are, the lower your life insurance premiums, so waiting only adds to the cost. That means even if you buy a policy when you’re young and don’t have any dependents to look out for, you’ll probably still save some cash.

Wait … don’t I get life insurance coverage from my employer?

Maybe. Many employers offer life insurance as a benefit, but the amount they provide isn’t usually adequate. (More on how much insurance you’ll want in a minute.) A lot of employer-sponsored policies won’t cover your remaining mortgage payments or take care of your loved ones after you’re gone. Plus, even if your company gives you everything you could ever want in a life insurance policy, you won’t get to keep it if you leave your job.

So should I pass on that benefit & get a policy elsewhere?

You can, but why wouldn’t you take the extra coverage that isn’t costing you? Your employer’s plan can serve as a supplement in case your loved ones ever have to use it.

How much life insurance should I have?

You don’t want to over- or under-insure, so there are five key things to think about.

1. College: How much will it cost for four years of college tuition for each of your children? Don’t forget to factor in inflation.
2. Dependents: How much will it cost to take care of any children or seniors who depend on you?
3. Debt: What will need to be paid off in the event of your death, like a mortgage or private student loan?
4. End of life expenses: What will need to be taken care of when you pass? Remember, funerals are expensive.
5. Financial cushion: What income would you have brought in that your spouse relies on — and for how long?

One other thing to factor in: your current savings. If you have enough in savings to cover any of these, in full or partially, you could opt for less coverage.

Getting insurance to take care of what happens in case you pass away isn’t something any of us like to think about, but it’s something we all should pay attention to. Want to know more? Check out these 20 questions about life insurance you were too embarrassed to ask.