Apr. 18, 2007

My wife and I are in our mid-30s and have no children yet. Does it make sense to have life insurance if we don't have kids? If we do get life insurance, is it possible to name a beneficiary who does not live in the United States?

Michael, New York

Although people frequently buy life insurance to cover their children's financial needs if their parents die, this is not the only reason to have coverage. Do you and your wife have a mortgage? Any other outstanding debts? For instance, if you and your wife had a mortgage, and you were to die, an insurance policy could help your wife pay off the debt, or at least pay your share.

As for how much life insurance to buy, or what type of policy, that will depend on your particular financial situation. Both term life insurance, which covers you for a specific period of time, and whole life insurance, which covers you for your whole life, can prevent others from incurring your debts when you die. Term life coverage is generally less expensive, but whole life coverage offers a "cash value" component, putting a portion of your premium into an interest-bearing account, which some people find attractive.

For more on the differences between term and whole life insurance, and how much insurance to buy, read The basics of term life insurance, How much life insurance do you need? and Cash value in life insurance: What's it worth to you?

As for beneficiaries, you are free to name anyone you like. The beneficiary need not be a U.S. citizen.

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Disclaimer: We are journalists, not financial planners or insurance brokers. Nothing we say should be interpreted as a recommendation to buy or sell any insurance product, or to provide other financial or legal advice.