Term or permanent life insurance? Start with the job it needs to do

Define the financial need first

Life insurance is designed to pay named beneficiaries after the insured person dies, subject to the policy's terms. Begin with who depends on your income or unpaid work, what expenses they would face, and how long that need might last. Existing savings and other coverage belong in the same review.

A useful worksheet lists ongoing household costs, debts, future obligations, and available resources. This is a discussion aid, rather than a universal formula for a coverage amount.

Compare the basic structures

• Term insurance provides coverage for a stated period. Ask whether premiums stay level, what happens when the term ends, and whether renewal or conversion options have deadlines.
• Permanent insurance is designed for longer-lasting coverage and may build cash value. Keeping it in force depends on meeting its funding and other conditions. Different permanent products have different guarantees, costs, and risks.

Separate guarantees from projections

If a proposal includes illustrated future values, ask which figures are guaranteed and which depend on assumptions. Request a clear explanation of charges, surrender values, and what happens if planned payments stop. Cash value and the death benefit are different features; ask how withdrawals or loans would affect each.

Questions before signing

• How long is the coverage intended to last, and what could cause it to lapse?
• Which premiums and benefits can change?
• Who are the primary and backup beneficiaries, and how can those choices be updated?
• If this replaces an existing policy, what charges, new underwriting, or restarted policy provisions should I understand?

Keep the decision reviewable

Take time to compare the actual policy documents. Revisit beneficiaries and coverage after major household changes, and tell beneficiaries where the policy can be found. This is general U.S. education, not a recommendation for a particular product or amount; discuss individual circumstances with an appropriately licensed professional.