Understanding Life Insurance: Who Needs It and How Much Coverage?

Experts weigh in on the importance of life insurance and how to determine the right coverage for your needs.

Published on Feb. 15, 2026

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Life insurance is an important financial tool, yet many Americans remain underinsured. This article explores the key reasons why life insurance coverage is crucial, including protecting young families, preparing for long-term care costs, and estate planning for high-net-worth households. It also outlines situations where life insurance may not be necessary, such as for retirees or individuals without dependents. The article provides guidance on determining the appropriate amount of coverage and the differences between term and permanent life insurance policies.

Why it matters

Adequate life insurance coverage is essential for protecting one's family and financial future, yet many Americans lack sufficient protection. This article aims to educate readers on the importance of life insurance and how to determine the right coverage amount based on their individual circumstances and needs.

The details

The article highlights several scenarios where increasing life insurance coverage is recommended, such as for young families starting out, older Americans preparing for long-term care costs, and high-net-worth households focused on estate planning. It also explains the differences between term and permanent life insurance policies, and provides guidance on factors to consider when determining the appropriate coverage amount, such as annual income, dependents, and financial goals.

  • The 2025 Insurance Barometer Study revealed that fewer than 3 in 10 Americans feel knowledgeable about life insurance.

The players

Justin Dempsey

Senior manager for direct-to-consumer business at The Banner Life family of companies.

Keith Singer

A certified financial planner in Boca Raton, Florida.

Holly Snyder

President of Nationwide Life Insurance.

Catherine Valega

A certified financial planner in Winchester, Massachusetts.

Nick Lamanna

Wealth management advisor at Northwestern Mutual.

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What they’re saying

“For the most part, we see people who are underinsured.”

— Justin Dempsey, Senior manager for direct-to-consumer business at The Banner Life family of companies

“If they give you two years' worth of your salary, then you're basically giving your dependents two years' worth of your lifestyle after you die. And unless your dependents are going to become independent within two years, it's never enough.”

— Keith Singer, Certified financial planner

“The nice thing about these hybrid products is, someone gets the money back one way or another.”

— Catherine Valega, Certified financial planner

“It does act as a flexible financial tool to build cash. It could fund retirement. It could fund higher education.”

— Nick Lamanna, Wealth management advisor at Northwestern Mutual

What’s next

Individuals should regularly review their life insurance needs as their life circumstances change, such as marriage, having children, buying a home, advancing in their career, or reaching retirement.

The takeaway

Ensuring adequate life insurance coverage is crucial for protecting one's family and financial future, yet many Americans remain underinsured. This article provides guidance on determining the appropriate amount of coverage based on individual needs and circumstances, underscoring the importance of life insurance as a key component of a comprehensive financial plan.