Term life
Term life pays a death benefit if you die within the term, usually 10, 20, or 30 years, and nothing otherwise. Because it has no savings component, it delivers the most coverage per premium dollar and fits most families during the years a mortgage and children depend on an income.
Whole and universal life
Permanent policies last your entire life and build cash value you can borrow against. Whole life has fixed premiums and guaranteed growth. Universal life offers flexible premiums; indexed universal life ties growth to a market index with a floor and a cap.
Permanent coverage costs several times more than term for the same death benefit. It fits estate planning, special needs dependents, business succession, and people who have maxed out other tax-advantaged accounts.
How much coverage
A common starting point is 10 to 12 times annual income, adjusted for debts, future education costs, and existing savings. Your agent can run a needs analysis that replaces the rule of thumb with your actual numbers.
Underwriting and riders
Expect health questions and, for larger amounts, a paramedical exam. Some carriers offer accelerated underwriting with no exam for healthy applicants. Common riders include waiver of premium on disability, accelerated death benefit for terminal illness, and term conversion to permanent coverage without new underwriting.
Key takeaways
- Term covers a specific period at the lowest cost.
- Permanent coverage adds cash value and lifetime protection at a much higher premium.
- Start at 10 to 12 times income and refine with a needs analysis.
- A conversion rider keeps your options open.
This guide is general education, not advice for your situation. Coverage, availability, and requirements vary by state and carrier. A licensed agent can confirm what applies to you.