Do You Need Life Insurance? Here's What Suze Orman Thinks

Here's what the famous financial expert has to say about affordable coverage.

If life insurance were free, perhaps more people would get it. Unfortunately, life insurance does cost money. But it's an expense worth paying for if you have people in your life who depend on you financially, whether it's a spouse, children, or other family member.

If you're not convinced, ask Suze Orman. As a well-known financial expert, Orman is a firm believer that life insurance is necessary. Not only that, but she thinks it's wise to secure a fair amount of coverage.

Just how much are we talking about? As Orman says on her blog, "To fully protect your loved ones and make sure they never have financial hardship, my advice is to consider a term life insurance policy that is at least 20 times (25 times is even better) the annual income that you need to be replaced."

Yikes. At first glance, 20 to 25 times your income might sound like a lot of coverage. And to be fair, other guidelines say you don't need nearly as much. For example, you may be able to get away with a death benefit equal to 10 times your income and provide adequate coverage for your loved ones. But if you are interested in a more robust policy, there are steps you can take to make it affordable.

How to swing life insurance

You might think there's no way you can afford a life insurance policy that will cover 20 to 25 times your income. But Orman insists that it's doable if you follow one key rule, and that's sticking to term life insurance.

Term life insurance only covers you for a preset period of time. That time frame could be 10 years, 20 years, 30 years, or a different number -- the choice is yours.

If you have young children, you may want to opt for a term life policy that covers you for at least 20 years. That way, if you were to pass away, your children would be covered until roughly young adulthood, at which point they can potentially get jobs and support themselves.

Now when you shop for life insurance, you may find that someone tries to sell you on a whole life policy. The upside there is that you'll get coverage for the rest of your life. Also, your policy will, in time, accumulate a cash value -- something term life insurance won't do.

But don't be fooled into thinking that whole life insurance is a good idea. Often, whole life policies are prohibitively expensive, so you're better off securing a reasonably priced term life policy that gives your loved ones the protection they need.

Listen to someone who clearly knows her stuff

Suze Orman is a recognized authority on personal finance matters, so when she gives out advice, it pays to listen. Though it's uncomfortable to imagine a scenario where your family might need life insurance, it's important to put that coverage into place. Doing so could give you some much-needed peace of mind -- and that alone has a lot of value.