Life insurance pays money to the people you choose, called beneficiaries, if you die while the policy is in force. It can help a family cover a mortgage, everyday bills or a child’s education. There are two broad kinds.
Term life insurance
Term life covers you for a set period, such as 10, 20 or 30 years. If you die during the term, your beneficiaries receive the death benefit. If the term ends while you are alive, the coverage stops, although some policies let you renew or convert. Term life is usually the simpler and less expensive way to buy a large amount of coverage for the years when people depend on your income.
Permanent life insurance
Permanent life, such as whole life or universal life, is designed to last your whole life as long as premiums are paid. Many permanent policies also build cash value over time. They usually cost more than term coverage for the same death benefit, and the details vary a lot from one policy to another.
Questions to ask yourself
- Who depends on my income, and for how many years?
- What debts would my family need to pay off?
- Do I already have coverage through work, and would it end if I changed jobs?
- Is my need temporary, such as until the mortgage is paid, or lifelong?
There is no single right answer. A licensed agent can explain the options from different insurance companies, show you how the premiums and features compare, and help you choose an amount that fits your family and budget.