Term Life Insurance

Life Insurance 101

What is life insurance?

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Life insurance pays a lump sum of cash (called a "death benefit") to the beneficiary upon the policyholder's death.

IT IS
  • A way to settle any debts you leave behind so that others don't have to pay them
  • A way to cover burial and other end-of-life expenses (for example, estate taxes)
  • A way to make sure your childern are cared for and that their college expenses will be covered
  • A way to make sure your spouse is supported
  • Paid in a lump sum that's usually* tax free
  • A way to create an inheritance even if you don't have any other assets
*There can be tax penalties under certain conditions, especially if you buy a more complicated permanent policy. For most basic term policies — which is what we recommend — the death benefit is not taxed.
IT IS NOT
  • A catch-all solution for major end-of-life expenses (like large medical bills or home health care)
  • An investment savings product
  • An alternative to a comprehensive retirement strategy

Things people usually cover

  • Co-signed debt including student loans
  • Mortgages
  • College expenses for the kids
  • Living expenses for your family
  • Stay-at-home labor expenses (cooking, cleaning, etc.)
  • Burial expenses
  • Loans from family members
  • Estate taxes that your heirs must pay for other assets

Typical cost

A basic term policy — which is all most people need — can cost as little as $300-$400 per year.

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Average expenses based on a $60K salary

Life insurance & retirement planning

Life insurance is unique in that there are novel ways it can be used for more than simple death benefits.

Depending on how complicated a policy you buy, you can use it for:

  • Investments
  • Tax breaks
  • Charitable donations
  • Estate planning
Death benefits
You should talk to a financial advisor if you think you need something more than a basic term policy.

How much insurance do you need?

I don't know how much I need

Helpful Resources

Need more info? Visit our Life Insurance Learning Center