Life insurance, explained in the order the decisions actually happen

Questions worth having answered

How much life insurance do I actually need?

Add up what would still have to be paid if your income stopped: the years of income your household would need to replace, the remaining mortgage balance, any other debts that would not be forgiven, childcare and education you intend to fund, and final expenses. Then subtract what is already in place — existing coverage through work or elsewhere, and liquid savings your family could actually reach. What is left is the gap, and that is the number worth insuring. The familiar shortcut of ten times income is a starting sanity check, not an answer: it lands badly high for someone with no dependants and no mortgage, and badly low for a parent of young children with twenty years left on a loan.

Term or permanent — which one is right for me?

The honest deciding question is whether the need has an end date. If the thing you are protecting resolves on a schedule — the mortgage is paid off, the children finish school, you reach retirement — term coverage matches that shape and costs meaningfully less for the same death benefit, because it is priced to expire. If the need does not end, or the policy is doing a second job you can name, such as leaving money regardless of when you die or funding a buy-sell agreement, permanent coverage is built for that and the higher premium is buying the difference. Where people go wrong is buying permanent coverage for a temporary need and being underinsured because that was all the budget allowed, or buying term for a lifelong obligation and finding it has expired when it was finally needed.

What should I look at on a policy I already own?

Four things, and the first one catches the most problems. Check who the beneficiaries are — they are set at application and do not update themselves after a marriage, a divorce, or a death, and the named beneficiary is who gets paid regardless of what a will says. Check whether the amount still matches your obligations, because a policy sized before a house or a child usually no longer does. Check whether the premium is level or scheduled to increase, and if it is a term policy, when it ends and what it converts to. And check whether it is still in force — coverage that lapsed for a missed payment does not announce itself.

Will I need a medical exam?

It depends on the policy and the amount, and it is worth knowing the tradeoff before you choose. Fully underwritten coverage usually involves health questions and often an exam or a records check, takes longer to put in place, and generally prices best if your health supports it. Simplified-issue coverage asks health questions but skips the exam, and guaranteed-issue coverage asks none at all — both decide faster and cost more for the same benefit, and guaranteed-issue policies commonly limit the full death benefit during the first couple of years. None of that is a reason to avoid applying; it is a reason to know which track you are on before you start.