Life insurance for families
Life insurance pays your family a sum, generally not taxed, if you pass away. There are two main kinds: term, which is temporary and low-cost, and whole, which lasts for life and builds value. Here is how to choose.
What it covers
- What it pays for
- A payout, generally not taxed, to the people who depend on you, to replace income, pay off a mortgage, or cover final costs.
- Term life
- Affordable coverage for a set period, often 10, 20, or 30 years. The most coverage for the money while your kids are young.
- Whole life
- Permanent coverage for your whole life, with level premiums and cash value that grows over time.
What it costs
Price depends on your age, health, the coverage amount, and the term length. Buying young locks in a lower rate.
What is good about it
- Term gives the most coverage for the money
The catch
- Term ends and may need replacing later
- Whole life costs much more than term
Common questions
- A common rule of thumb is 5 to 10 times your yearly income, enough to cover your mortgage and debts, final costs, and several years of living expenses for the people who depend on you. Your age, health, debts, and number of dependents all matter, so an agent can help you size it.