Quick answer
First, it probably costs less than you think
In a 2025 LIMRA study, healthy adults ages 18 to 30 guessed that life insurance cost 10 to 12 times more than it really does. Many people skip it because they think it's too expensive. Get a real price before you decide.
Term vs. whole life at a glance
| Term life | Whole life (permanent) | |
|---|---|---|
| How long it lasts | A set time, like 10, 20, or 30 years | Your whole life, as long as you pay |
| Price for the same coverage | Much lower | Much higher |
| Cash value | None | Builds cash value you can borrow against |
| Price over time | Level for the term, if you choose a level plan | Usually fixed |
| Best fit | Covering the years people depend on your income | Needs that last your whole life |
Term life insurance
How it works: you pick a length, like 10, 20, or 30 years, and an amount. If you die during that time, your family gets paid. If you outlive the term, the coverage ends.
Why people choose it: - It costs the least for the most coverage. - It's simple. - It lines up with the years your family needs you most, like while kids are young or the mortgage is being paid.
Things to know: - Look for a level price that stays the same for the whole term. - Ask if you can convert it to permanent coverage later without a new medical exam. That helps if your health changes.
Permanent life insurance
How it works: it lasts your whole life, as long as you pay. Part of what you pay builds cash value you can borrow against.
Types you'll hear about: - Whole life: a fixed price and guaranteed cash value growth. - Universal life: more flexible payments and coverage amounts. The cash value can depend on interest rates. - Indexed and variable universal life: the cash value is tied to the market. They have more upside and more risk. They're also harder to understand.
Why people choose it: - Needs that last your whole life, like paying estate taxes or supporting a child with special needs - Wanting coverage that never ends - Some people like the forced savings
Things to know: - It costs a lot more than term for the same amount of coverage. - Fees can be high, especially in the early years. - Canceling early can mean losing much of what you paid in.
When each one may make sense
Term often fits if you want to cover a mortgage, replace your income while kids are growing up, or get the most coverage for your budget.
Permanent may fit if you have a lifelong need, like a dependent who will always need support, and you understand the higher cost and fees.
If you're not sure, talk with a licensed agent or a fee-only financial planner, and compare quotes for both.
How much coverage do you need?
Add up what your family would need if you died:
- Debts: mortgage, car loans, credit cards
- Income: your yearly pay times the number of years your family would need it
- Future costs: childcare, college, a funeral
- Then subtract your savings and any life insurance you already have
That's a rough target. Many families find they need more than they thought.
Don't count only on insurance through work
Coverage through your job is a nice perk. But it's often small, sometimes just one or two times your pay. It usually ends if you leave the job. Think of it as a bonus, not your main plan.
Simple steps to buy
- Figure out how much you need.
- Pick a term length that covers your family's biggest-need years.
- Compare quotes from a few strong insurance companies. Start with life insurance costs and options.
- Answer the health questions honestly. Wrong answers can lead to a denied claim.
- Name your beneficiaries, and update them after marriage, divorce, or a new baby.
Need a small policy just for funeral costs? See final expense insurance.
Related pages
More life insurance guides: Life insurance · Final expense insurance · The life insurance suicide clause · All insurance
Questions people ask
Sources
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