What life insurance does
- Pays a tax-free lump sum (the death benefit) to your beneficiaries if you die during the policy.
- Protects income for your family, pays off debts (like a mortgage), funds kids’ education, and can cover final expenses.
Main types (and when each fits)
- Term life
- Coverage for a set period (10/15/20/25/30/40 years).
- Highest coverage per dollar; great for income replacement and mortgages.
- Often convertible to permanent coverage before a certain age.
- Whole life
- Lifetime coverage with fixed premiums + guaranteed cash value growth.
- Used for estate planning, lifelong dependents, or people who value guarantees.
- Universal life (UL/IUL/GUL/VUL)
- Flexible premiums/benefits; cash value tied to credited rates, indexes, or investments.
- Good when you need adjustable lifetime coverage or targeted guarantees (e.g., GUL = “lifetime term” feel).
- Final-expense / guaranteed-issue
- Small whole-life policies, minimal underwriting.
- For people who can’t qualify elsewhere and want to cover burial costs.
How much coverage to buy (quick rule + precise method)
- Quick rule: 10–15× annual income (add large debts; subtract existing assets/coverage).
- Precise method (DIME): Debt + Income replacement (years × annual need) + Mortgage + Education − current savings/insurance.
Want me to run numbers for you? Share your age, income, debts (incl. mortgage), years you’d like to protect, and current savings/coverage, and I’ll calculate a target amount.
How long should the term be?
- Match to when big obligations end: youngest child’s independence, mortgage payoff, or planned retirement date.
- Common picks: 20–30 years for young families; 10–15 years for late-career debt/income bridge.
What affects your premium the most
- Age (earlier is cheaper), health history, nicotine/vaping, driving record, occupation/hobbies, coverage amount, term length, and riders.
- Medical underwriting ranges from no-exam (simplified, slightly higher cost) to full exam (blood/urine, lower cost if healthy).
Riders worth considering
- Accelerated death benefit (often included): access part of the benefit for terminal illness.
- Waiver of premium: premiums waived if you become disabled.
- Child term rider: small coverage for kids; can convert later.
- Term conversion: convert to permanent without new medical underwriting (note the deadline/age).
- Return of premium (ROP): refunds premiums if you outlive the term (higher cost—do the math).
Common mistakes to avoid
- Buying too little (just funeral costs) when you really need income replacement.
- Picking a term that’s too short (policy ends while you still have big obligations).
- Naming the estate as beneficiary (can slow payout/probate). Use people or a trust.
- Letting a convertible term lapse without considering conversion options.
- Focusing only on price and ignoring insurer financial strength or rider flexibility.
How to shop (fast checklist)
- Decide amount (rule or DIME) and term length.
- Gather basics: age, height/weight, medications, medical history, nicotine status, driving record.
- Compare quotes from multiple A-rated insurers (e.g., via a broker/marketplace).
- Check conversion terms and rider availability, not just premium.
- If you have health issues, use a broker who knows impaired-risk carriers.
Special situations
- Homeowners: term sized to mortgage + living expenses beats lender’s mortgage protection (more flexible).
- Business owners: consider key-person, buy-sell funding, or collateral assignment for loans.
- Stay-at-home parents: insure them too—childcare and household services have real replacement costs.
- Estate planning: permanent insurance inside an ILIT can keep proceeds outside the taxable estate (talk to an attorney/CPA).
If you’d like, tell me your age, state, smoker/non-smoker, desired coverage, and term (or your DIME inputs), and I’ll suggest a tailored plan structure and a short list of carrier/rider setups that fit.