Coverage for the years they depend on you, or for life
If someone relies on your income, your care or your help with the bills, life insurance is how that support continues. The two classic ways to buy it are term and whole life, and each one does a different job well.
The most protection for the lowest price
Term life covers you for a set number of years, commonly 10, 20 or 30. The premium stays level for the whole term, and if you die during it, your beneficiaries receive the death benefit. If you outlive the term, the policy simply ends.
Because it carries no savings component, term is the least expensive way to buy a large amount of coverage. That makes it the natural choice for the years your family leans on you most: while children are at home, while the mortgage is being paid, or until retirement savings can stand on their own.
Permanent coverage that builds value as you go
Whole life insurance lasts for your entire life as long as the premiums are paid. The premium is set when you buy it and never goes up, the death benefit is guaranteed, and part of every payment builds cash value at a rate the policy spells out in advance.
That cash value belongs to you. You can borrow against it for an emergency, a down payment or retirement, although a loan that is not repaid reduces what your family receives. Whole life costs more than term for the same death benefit, so it suits people who want coverage that can never expire, level costs they can budget around, or a guaranteed inheritance to leave behind.
How much coverage is enough?
A quick rule of thumb is a multiple of your yearly income, but a better answer adds up what the money actually has to cover. One simple method goes by the letters DIME:
Debt
Car loans, credit cards, medical bills and anything else that would otherwise land on your family.
Income
Your yearly income times the number of years your family would need it replaced, often until the youngest child is grown.
Mortgage
What it would take to pay off the house, or to keep making the payments, so nobody has to move.
Education
What you hope to contribute toward college, trade school or other training for each child.
Subtract savings and any coverage you already have, including a group policy at work, and the gap is a sensible target. We will run these numbers with you before recommending an amount.
Term and whole life, answered
What happens when my term policy ends?
Coverage stops unless you renew or convert it. Renewing is usually possible but the price climbs steeply each year. Many term policies include a conversion option that lets you switch to permanent coverage without new health questions, but only before a deadline written into the policy. If you already own a term policy, it is worth knowing that date.
Is the death benefit taxed?
Life insurance paid to a named beneficiary is generally not subject to federal income tax. Very large estates can still owe estate tax, and Maryland has its own estate and inheritance rules. Your tax professional can confirm how it applies to you.
Can I buy life insurance without a medical exam?
Some policies are approved with health questions only, sometimes within days. They can cost more or cap how much coverage you can get. A traditional exam often earns a better price, so it is worth comparing both.
Can I own more than one policy?
Yes. Many families do exactly that, for example a 20-year term policy that covers the mortgage years plus a smaller whole life policy that stays in force for life. Each insurer will ask what coverage you already have.
See term and whole life prices side by side
Tell us roughly how much coverage you have in mind, or let us help you work it out. We will come back with real prices for term, whole life or a mix, and explain the trade-offs before you decide anything.
Protecting a home as well? Read about mortgage protection.
Policy features, guarantees and prices vary by insurer, and all coverage is subject to underwriting. Guarantees are backed by the claims-paying ability of the issuing insurance company. Tax statements are general information, not tax advice.