Determining how much life insurance you need requires an examination of your current and future financial obligations, along with the resources your family could tap. Your future obligations are a combination of what it would cost to help your surviving family members meet immediate and ongoing needs like funeral costs, taxes, food, clothing, utilities, mortgage payments, and your future obligations like college and retirement funding. The resources that your surviving family members could draw on to meet those obligations include your spouse’s or partner’s income, savings and investments, other income producing assets, and any life insurance you might already own.

Such ads are for “guaranteed issue” policies that ask no health history questions. The company knows it is taking a risk because people with bad health could buy their policies. The company balances the risk by charging higher premiums or by limiting the amount of insurance you can buy. The premiums can be almost as much as the insurance. After a few years you could pay more to the insurance company than it will have to pay to your beneficiary. Such policies may offer only the return of your premiums if you die within the first couple of years after you buy the policy.

Most people hear the word “disability” and assume this form of insurance only applies to very serious injuries and illnesses — yet many common injuries (like fractures) or chronic conditions (like back, hip, or knee problems) can result in your not being able to do your job and earn a paycheck.

According to the U.S. Social Security Administration, more than one in four of today’s 20-year-olds can expect to be out of work for at least a year because of some disabling condition before they reach age 67 (the normal retirement age). Will you have an ability to pay your bills if you need to miss work for several months? If you don’t have access to that much in emergency savings, or friends or family that can help pay your bills when you need to take time off work, disability insurance makes a lot of sense.

Your insurance contract will specify if you can receive benefits while working part-time. Many policies allow you to work, but take the amount you earn and subtract it from your benefit. If your policy has a lifetime benefit cap, working part-time may extend the life of your benefits.

Insurance companies typically do not sell disability insurance policies which replace all of your income, but they do sell policies which can replace up to 70 percent of your income. If your employer does not offer a disability plan with 70 percent coverage, you may want to look for supplemental insurance coverage to offset the difference.

One major benefit of owning your policy: When you pay premiums yourself, you are paying with after-tax dollars. Therefore, any benefits will likely be tax-free. Tax-free benefits paying 70 percent of your income comes close to being 100 percent of your take-home pay. If your employer pays the premiums and the cost is not included in your taxable income, then benefits will likely be subject to taxation.