Term Life Insurance Basics

Simple coverage for a set period of time, designed to replace lost income.

Whole vs Term Life Explained

Learn how term and whole life insurance differ in cost, coverage length, and benefits.

A simple expense calculator to determining the right life insurance amount for you.

How much coverage do I need?

Life Insurance Explained: A Beginner’s Guide to Coverage

Life insurance is designed to provide financial protection for your loved ones if you pass away. It helps replace lost income, cover debts, and manage final expenses. Understanding how life insurance works begins with learning the basic parts of a policy and the different coverage options available.

This guide explains everything in simple terms.

What Is Life Insurance?

Life insurance is a contract between you and an insurance company. You agree to pay a regular premium, and in return, the company agrees to pay a lump sum (called a death benefit) to your chosen beneficiaries if you pass away while the policy is active.

The purpose is to protect the people who depend on you financially.

Key Life Insurance Terms Explained

• Death Benefit

The amount of money paid to your beneficiaries when you pass away. It is typically income-tax free.

• Beneficiaries

The people (or organizations) you choose to receive the death benefit.

• Premium

The payment you make monthly or annually to keep the policy active.

• Policy Term

The length of time your coverage lasts (for term life policies).

Types of Life Insurance Explained

There are two primary life insurance coverage options:

Term Life Insurance

• Covers you for a specific period (10, 20, or 30 years)

• Usually more affordable

• No cash value

• Ideal for income replacement during working years

Whole Life Insurance

• Provides lifetime coverage

• Builds cash value over time

• Higher premiums

• Can be used for long-term financial planning

How Much Life Insurance Do You Need?

The amount depends on:

• Annual income

• Outstanding debts

• Mortgage balance

• Children’s future expenses

• Savings and investments

A common guideline is 10–15 times annual income, but every situation is different.

Auto Deductible Cost Calculator (Out-of-pocket + “worth it?”)

Frequently asked questions

How much life insurance do I need?

The amount of life insurance you need depends on income, debts, and future financial goals. Many experts suggest 10–15 times your annual income, but your ideal coverage should also consider mortgage balance, children’s education costs, and existing savings.

Is term life insurance enough?

For many families, term life insurance is enough. It provides affordable coverage during the years your income is most needed. However, those seeking lifelong coverage or cash value benefits may consider permanent life insurance options.

What is the cheapest type of life insurance?

Term life insurance is typically the most affordable option. Because it provides temporary coverage for a specific period, premiums are usually lower than permanent life insurance policies.

Can I get life insurance with health problems?

Yes, some life insurance policies are available for people with health conditions. Options may include simplified issue or guaranteed issue life insurance, though premiums may be higher and coverage amounts lower.

What happens when term life insurance ends?

When a term life policy expires, coverage stops unless renewed or converted. Some policies allow renewal at a higher premium, while others offer the option to convert to permanent coverage before the term ends.