Why consider life insurance?
Families may use a death benefit for income replacement, a mortgage, other debts, education or final expenses. Coverage is a financial decision based on your household—not a guarantee that every debt or future expense will be paid.
Review existing insurance, savings, survivor income and obligations before deciding how much coverage you need. A fixed multiple of income is not a substitute for reviewing your own circumstances.
Estimate the amount you may need
| Need | What to include |
|---|---|
| Immediate expenses | Final illness, burial or cremation, outstanding bills and other obligations. |
| Adjustment period | Time for family members to change work, housing or childcare arrangements. |
| Ongoing needs | Housing, living expenses, dependent care and education. |
| Existing resources | Savings, existing policies, survivor income and other assets. |
| Affordable premium | A payment you can maintain as your circumstances change. |
Term and permanent insurance
| Type | Basic purpose | What to review |
|---|---|---|
| Term life | Coverage for a specified period; pays for a covered death during that term. | Term length, level or decreasing benefit, renewability, conversion rights and future premiums. |
| Whole life | Permanent coverage designed to continue while required premiums are paid. | Guaranteed premiums and benefits, cash value, loan effects and surrender charges. |
| Universal life | Permanent coverage with policy-specific flexibility. | Funding requirements, charges and which illustrated values are not guaranteed. |
| Variable life / variable universal life | Permanent coverage with investment-linked values. | Investment risk, fees and the need for appropriately licensed guidance. |
Choose beneficiaries carefully
Name primary and contingent beneficiaries, keep designations current and consider how a minor or person with special needs would receive funds. Policy loans or withdrawals may reduce cash value or the death benefit.
Death proceeds are often excluded from federal income tax, but exceptions and other tax issues can apply. Ask a qualified tax or legal professional about your situation.
Questions before you buy or replace a policy
- When does coverage begin, and are there exclusions, contestability periods or graded benefits?
- What happens if I miss a premium or become disabled? Is a waiver-of-premium rider available?
- Which riders are offered, what do they cost and how do accelerated benefits affect the remaining death benefit?
- Does the application require health questions, records or an exam?
- What fees or surrender charges apply? Which values are guaranteed?
- If replacing insurance, what benefits or guarantees would I lose, and would new waiting or contestability periods begin?
Do not cancel an existing policy until replacement coverage is issued, accepted and effective. If your main goal is funeral costs, also review final expense insurance.