What to Actually Think About Before You Buy Life Insurance

Life insurance is easy to put off. There's no dent in the bumper forcing the decision, no renewal notice creating a deadline, just a vague sense that you should probably get around to it. Most people we talk to aren't confused about whether they need it. They're just not sure how much, what kind, or where to start.

Here's the plain version.

Term vs. whole, in plain language

Term life covers you for a set number of years, usually 10, 20, or 30, and pays out only if you die during that term. It's the cheaper option and it's built for a specific job: covering the years your family would actually struggle without your income, like while you're paying a mortgage or raising kids.

Whole life lasts your entire life and builds cash value you can borrow against. It tends to cost more, and it's typically used for specific situations, like estate planning or a permanent need that doesn't go away when the kids move out.

There's no universal right answer here. It depends on what you're actually trying to protect against, and for how long.

How much coverage actually makes sense

A common rule of thumb is 10 to 12 times your annual income, but that's a starting point, not a formula. What matters more is running the actual numbers for your household:

• What debts would still need to be paid off, including the mortgage
• How many years of income your family would need replaced
• Future costs you'd want covered, like college for the kids
• Final expenses: funeral costs average several thousand dollars
• Any existing coverage through work, which usually isn't enough on its own and rarely follows you if you leave the job

When it is time to look again

Life insurance isn't a one-time decision. It's worth revisiting whenever something changes the math:

• You get married or divorced
• You have a child, or another one
• You buy a house or take on a new mortgage
• You start or take over a farm or business
• Your income changes significantly, in either direction
• It's just been a few years and you haven't checked