Life insurance
Cover the risk you can't afford to leave uncovered
The point isn’t the policy. It’s that the mortgage still gets paid and the children still go to college if you’re not here.
The main types
Term
Coverage for a set period — ten, twenty or thirty years. The least expensive way to cover the largest risk, and the right answer for most families with dependent children and a mortgage.
Whole life
Permanent coverage with a guaranteed death benefit and cash value that builds over time. Higher premium, but it doesn’t expire and the cost doesn’t climb.
Universal life
Permanent coverage with flexibility in premium and death benefit, and cash value tied to interest or an index depending on the design.
How much do you actually need?
The rules of thumb — ten times income, say — are a starting point, not an answer. The useful version is arithmetic.
Add up what would need paying: the remaining mortgage, other debts, the years of income your household relies on, education costs still ahead, and final expenses. Then subtract what already exists — savings, existing coverage, and any group life through an employer.
The gap is your number. It usually shrinks over time, which is exactly why term coverage fits so many households.
What life insurance is used for
- Replacing income a household depends on
- Paying off a mortgage so the house stays in the family
- Funding a buy-sell agreement between business partners
- Covering final expenses without draining savings
- Equalizing an inheritance between children
- Leaving money to a cause that matters to you
A note on employer coverage
Group life through work is genuinely useful and usually cheap. It is also rarely enough, and it generally doesn’t follow you when you leave.
If your entire plan is the policy your employer provides, it’s worth knowing what happens to it if you change jobs, retire, or are laid off at fifty-eight.
The same caution applies to federal employees with FEGLI, where premiums rise steeply in later age bands. That’s covered on the federal benefits page.
Work out your number
It takes one conversation and some straightforward arithmetic. No obligation to buy anything at the end of it.