Question 1

How much life insurance do I need?

Accepted Answer

A common starting framework: 10–12 times your annual income, plus mortgage balance, plus children's education funding, plus other debt — minus existing assets and existing coverage. For a family earning $150K with a $300K mortgage and two young children, the math suggests $1.5M–$2M coverage. Business owners need additional coverage for buy-sell agreements and key person protection. The right number depends on your specific obligations, lifestyle, and survivors' needs. Working with an advisor produces better-aligned coverage than rough rules of thumb.

Question 2

Term vs. whole life — which is right?

Accepted Answer

Term life is right for most working-age families: pure protection during the years dependents need it, at premiums often 5×–10× cheaper than permanent life. A healthy 35-year-old can buy $1M of 20-year term for $30–$50/month; the same death benefit in whole life might cost $700–$1,200/month. Permanent life makes sense for: high-net-worth estate planning, business succession, lifetime income replacement, and providing tax-deferred cash accumulation. For most middle-income families, term life solves the protection need at affordable cost.

Question 3

What's universal life and indexed universal life?

Accepted Answer

Universal life (UL) is permanent insurance with flexibility in premium amount and death benefit — you can adjust either over time. Indexed universal life (IUL) adds a feature where cash value growth is linked to a stock market index (S&P 500 typically) with a floor (no losses) and a cap (maximum gain). UL works for those who need permanent coverage with budget flexibility. IUL appeals to those wanting market-linked growth with downside protection but requires careful product analysis — fees and caps significantly affect actual performance. Some IUL products are aggressively marketed with overstated illustrations; work with an independent advisor.

Question 4

Will I qualify for life insurance?

Accepted Answer

Most healthy adults under 70 qualify for some form of life insurance. Underwriting evaluates age, health status, lifestyle factors (smoking, alcohol use, occupation), prior medical conditions, and family medical history. Standard underwriting typically requires medical exam (paramedical exam at home or office) plus blood and urine sampling. No-medical-exam policies are available but at higher premiums and lower limits. Pre-existing conditions don't necessarily disqualify — they may result in rated (higher premium) coverage rather than denial.

Question 5

Should I buy life insurance through my employer?

Accepted Answer

Group life through employers is convenient but limited: typically 1–2× annual salary at low cost, but coverage usually ends when you leave employment, and the limits are inadequate for most family protection needs. Use employer coverage as a supplement, not the foundation. Personal life insurance moves with you between jobs, has higher available limits, and locks in your insurability while young and healthy. Most insurance professionals recommend personal coverage for the foundation with employer coverage as bonus protection.

Question 6

What about life insurance for stay-at-home spouses?

Accepted Answer

Stay-at-home spouses provide significant economic value through childcare, household management, and unpaid work that would cost the family substantially if outsourced. The replacement cost of stay-at-home work is typically $50K–$100K+ annually depending on the household. Life insurance on stay-at-home spouses is essential — typically $500K–$1M term coverage to fund the cost of childcare, housekeeping, and support services if the spouse passes away. The need is real even though there's no employment income to replace.

Question 7

How is life insurance priced?

Accepted Answer

Premium drivers include age, health status, gender (women typically pay slightly less due to longer life expectancy), tobacco use (smokers pay 2×–4×), occupation hazards, hobbies (skydiving, scuba diving, motorcycle riding can affect rates), coverage amount, term length, and policy type. Term life pricing is highly competitive — shopping multiple carriers can produce 30%+ premium differences for identical coverage. A 35-year-old non-smoker in good health can typically buy $1M of 20-year term for $30–$50/month; the same coverage at 50 might cost $80–$150/month.

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