In the simplest terms, whether you need to buy a life insurance policy depends on whether you have people who are dependent on your income and how dependent they are. If you have a spouse, child, parent, or other individual who depends on your income, you probably need life insurance. If you own a business, particularly one that has employees, you might need life insurance for business maintenance purposes.

The unexpected death of a family member is devastating for survivors. Adequate life insurance coverage can protect your loved ones against the financial hardships of your death by providing them with the money needed to manage certain expenses. The cash they receive from your life insurance policy replaces your income and can help your family cover daily living expenses, mortgage payments, and college expenses.

Life insurance offers protection against a whole host of financial issues that can arise as the result of your death. The costs of dying can be very high. Burial costs are steadily increasing throughout the country. Funeral costs are also on the rise. Funerals and burial costs can easily add up to over $10,000. This is a lot of money and leaving all of these expenses for your loved ones to deal with might provide quite a burden for them. If you are the primary breadwinner for your family and you pass away without a life insurance policy, your family may have no resources to bury you. This would make dealing with your death even harder for your family.

A basic life insurance policy will be large enough to cover funeral expenses. A good policy will provide enough of a financial security blanket to cover funeral expenses and enough money to help your family safely transition into a life without you, providing them with the time they need to recover, both financially and emotionally. Rebuilding a life after a profound loss can be a difficult task in the best of situations. Leaving behind as much money as possible can really help ease this burden.

To decide if you need life insurance, think about the worst-case scenario. If you were to die tomorrow, how would your loved ones get along financially? Would they at least have enough money to pay for your funeral costs? Would they have the money to pay your medical bills, taxes, mortgage, and credit card debt? Would they be able to meet ongoing living expenses like food, clothing, transportation, and healthcare? What about long-range financial goals? Without your contribution to the household, would your surviving spouse be able to save enough money to retire comfortably?

Here are some typical scenarios to help you decide what life insurance you need:

Two-income families with young children or other dependents: The younger your children, the more insurance you need. Because both spouses earn an income, both spouses should be insured, with insurance amounts proportionate to income amounts. If you cannot afford to insure both wage earners, insure the person who earns the most first, and insure the second wage earner as soon as that becomes possible.

Families with one stay-at-home parent: Could the working spouse afford to pay someone to provide the care the stay-at-home parent provides if the stay-at-home parent died? Just because one spouse doesn’t earn a salary doesn’t mean he or she doesn’t make a financial contribution to the family. Childcare, transportation, cleaning, cooking, and other household activities are all important tasks, and the working spouse would likely have to pay someone to take care of these necessities. Some surveys estimate the value of these services at over $40,000 per year.

Insurance should be purchased to cover the services being provided by the stay-at-home spouse. However, if funds are limited, insurance on the wage earner should be acquired first. Single parent: As a single parent, you’re the caregiver, breadwinner, cook, chauffeur, and more. Unfortunately, nearly 40% of single parents have no life insurance whatsoever. Your children and the caregiver left to take care of them will need financial support, which you can provide through a life insurance policy.

Married couple with no dependents: If your spouse could live comfortably without your income, then you will need less insurance than the people in the above situations. If you died suddenly, could your spouse maintain his or her standard of living on your spouse’s income alone? Would your spouse have enough money to cover funeral and burial expenses? You will still need some life insurance. At a minimum, you will want to provide for burial expenses, paying off whatever debts you have incurred, and provide as comfortable a transition as possible for the surviving spouse. The amount of insurance you need depends on your salary level and that of your spouse, the amount of savings you have, and the amount of debt you both have.

Single adults with no dependents: You need only enough insurance to cover burial expenses and debts. Exceptions would include single people who provide financial support for aging parents, siblings, or others. If you’re in these types of situations, you should consider owning additional life insurance.

Retirees: There is less of a need for life insurance after retirement. You will need some insurance to pay burial expenses, final medical costs, and debts. You may also need to provide income for your spouse after you die if your retirement assets are not large enough.

TIP: The most successful way to qualify for a low monthly premium is to maintain your health and prove to insurance companies that your health is of value to you. Habits like smoking or drinking or behaviors that result in frequent traffic violations can have a major impact on how much you will have to pay in monthly premiums. While some plans do not require you to have a medical exam to qualify, these policies are usually more expensive, so it is in your best interest to maintain your health in a way that helps you qualify for policies from reputable life insurance companies that do require medical exams.