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By Robert Brokamp (TMF Bro)
June 11, 2003

Many shocking images from September 11 have been seared into our memory. One image that remains with me, however, doesn't involve airplanes or buildings. It's the photo of a mother and her children sitting in their living room. The father of this family -- the sole breadwinner -- perished in the attacks. He didn't have life insurance.

While such a tragic picture is memorable by itself, what made it even more unforgettable for me was what else was in the photo. Behind the family was a humongous big-screen TV.

Not knowing the family's situation, I can't make too many judgments. But it's probably safe to say that the survivors in such a situation would now value a life insurance policy over a home-entertainment system. The price of a wide-screen TV could easily pay for four or five years' worth of premiums on a 10-year, $500,000 term life insurance policy for a healthy 40-year-old male.

The bottom line is, if there are people who rely on your income, or it would be expensive to replace what you do (e.g., raise the kids), then you should have life insurance. This is not a discretionary expense.

Even if you do have life insurance, don't rest on your laurels (or anyone else's). A survey released last month by The Hartford Financial Services Group (NYSE: HIG) found that the majority of households with annual incomes of $100,000 or more are underinsured. The results indicated that 64.6% of these households have less than $500,000 in coverage, and 10.6% have less than $100,000. The Hartford press release says such levels are insufficient, since "many financial professionals recommend buying a minimum of between seven and 10 times your annual salary to replace your income and adequately protect your family."

That's a fine rule of thumb, but like any general guideline, it doesn't take individual circumstances into account. The actual amount of life insurance you should have depends on your annual expenses, how long those expenses will need to be paid, the value of your other assets, and the Social Security benefits your survivors will receive.

Sound like a lot? It's not as bad as it sounds. We lay out the process in a series of articles in our Insurance Center. If you'd prefer getting professional help in determining the amount of insurance you need, consider our TMF Money Advisor service.

While buying life insurance won't be as fun as watching The Simpsons on a 60" television screen, it is infinitely more valuable to you and your family.