Life Insurance 101: What You Need to Know

Life insurance provides financial security for your loved ones after you’re gone, but choosing the right policy requires understanding the basics. The two main types are term life and whole life insurance. Term life covers you for a set period, like 20 years, and is more affordable, making it ideal for young families or those with temporary needs. Whole life lasts your entire life and includes a cash value component that grows over time, but it’s pricier.

To determine how much coverage you need, calculate your family’s future expenses, including debts, mortgage, and living costs. A common rule is 10-15 times your annual income, but online calculators can refine this based on your situation. Consider your dependents’ needs, like college tuition or retirement for a spouse, and factor in inflation.

Life insurance isn’t just for breadwinners. Stay-at-home parents may need coverage to replace services like childcare. Compare quotes from reputable insurers and check their financial strength through ratings from AM Best. Policies vary, so review terms like renewability for term life or dividend options for whole life.

Buying early locks in lower rates, as premiums rise with age and health risks. Be honest on applications, as misrepresenting health can void coverage. Life insurance offers peace of mind, ensuring your family’s stability. Learn more about protecting your finances in our 2025 insurance trends guide.