A coworker of mine put off buying life insurance for three years because the topic felt overwhelming. Term, whole, universal, riders, conversion options, beneficiary designations. By the time he finally sat down with an agent, he was 38 instead of 35, and the same $500,000 term policy cost him $45 more per month. Over 20 years, that delay cost him $10,800 in extra premiums. For doing literally nothing.
Life insurance doesn’t have to be complicated. But you do need to ask the right questions. These life insurance questions to ask before buying a policy will help you figure out how much coverage you need, what type makes sense, and how to avoid overpaying for protection you don’t need (or underpaying for protection you do).
Print this, bring it to your meeting, and don’t sign anything until every question has a clear answer.
Before You Contact an Insurance Agent
Doing basic homework before your first conversation saves time and helps you spot bad advice when you hear it.
- Calculate your coverage need roughly. Add up your debts (mortgage, car loans, student loans), 10 years of income replacement, future expenses (kids’ college), and funeral costs. Subtract liquid assets. The number you’re left with is your starting point for coverage.
- Know your health basics. Your height, weight, blood pressure, cholesterol, any medications, and family health history all affect pricing. Having these details ready speeds up the quoting process.
- Understand your budget. Decide what you can comfortably spend per month on premiums. For most healthy adults in their 30s, $500,000 in term coverage costs $25 to $50 per month. Knowing your range prevents an agent from upselling you into a policy you can’t sustain.
- Research basic policy types. Spend 15 minutes learning the difference between term and permanent life insurance. You don’t need to be an expert, but knowing the basics helps you evaluate an agent’s recommendation.
- List your beneficiaries. Decide who should receive the payout and in what proportions. This seems obvious, but many people walk into a meeting without having discussed it with their spouse or family. An estate planning guide can help you think through beneficiary decisions and related topics like wills and trusts.
Policy Types and Coverage Amounts
1. What type of life insurance do I actually need: term or permanent?
This is the biggest decision you’ll make, and it’s simpler than the industry wants you to believe.
Term life insurance covers you for a set period (10, 20, or 30 years) and pays out only if you die during that term. It’s straightforward, affordable, and what the vast majority of families need. A healthy 35-year-old can get $500,000 in 20-year term coverage for $25 to $45 per month.
Permanent life insurance (whole life, universal life, variable life) covers you for your entire life and includes a cash value component that grows over time. It costs 5 to 15 times more than term insurance for the same death benefit. For most families, term insurance plus investing the premium difference in a retirement account produces better long-term results.
Permanent insurance makes sense in specific situations: estate planning for high-net-worth individuals, funding buy-sell agreements for business owners, or providing for a lifelong dependent. If none of those apply to you, term is almost certainly the right choice.
2. How much life insurance coverage do I need?
The old “10 times your salary” rule is a starting point, but it’s not precise enough for a decision this important.
A better approach: add up everything your family would need to cover if you died tomorrow. Include mortgage payoff ($250,000+), other debts ($20,000 to $80,000 for many families), 10 to 15 years of income replacement, childcare costs if your spouse works, college funding ($100,000 to $200,000+ per child), and final expenses ($10,000 to $15,000).
Then subtract what’s already covered: existing savings, retirement accounts, any employer life insurance, Social Security survivor benefits, and your spouse’s income. The gap between what’s needed and what’s covered is your target coverage amount.
For a family with two young kids, a mortgage, and one primary earner making $80,000, coverage in the $750,000 to $1,000,000 range is common. That sounds like a lot until you break down the math.
3. What term length should I choose?
Match the term to your longest financial obligation. If your youngest child is 3 and you want coverage until they’re through college, a 20-year term covers you. If you just took out a 30-year mortgage, a 30-year term ensures the house gets paid off.
Here’s the practical approach: pick the term that covers you until your financial dependents are self-sufficient and your major debts are paid. For most families with young children, 20 to 30 years is the sweet spot. A 20-year term policy costs about 20% less than a 30-year term, so there’s a real trade-off to consider.
Premiums and Costs
4. How much will my premiums be, and can they change?
With term life insurance, your premiums are locked in for the entire term. A $35/month premium today stays $35/month for the next 20 (or 30) years. This predictability is one of term insurance’s biggest advantages.
With permanent life insurance, it depends on the type. Whole life premiums are fixed. Universal life premiums can fluctuate based on the policy’s performance, and in some cases, you’ll be asked to pay more than originally projected to keep the policy active.
Ask your agent to show you the guaranteed premium schedule, not just the illustrated one. Illustrations assume best-case investment returns. Guarantees are what the insurer is legally committed to.
5. What factors determine my premium rate?
Your premium is based on your age, health, gender, smoking status, coverage amount, term length, and (sometimes) occupation and hobbies. Here’s what actually moves the needle:
Age is the biggest factor. Every year you wait, your premium increases 4% to 8%. Smoking roughly doubles or triples your rate. Health conditions like diabetes, high blood pressure, or a family history of heart disease increase rates, but don’t automatically disqualify you. Some insurers are more lenient on specific conditions than others, which is why comparing quotes matters.
A healthy 30-year-old woman might pay $22/month for $500,000 in 20-year term coverage. That same policy for a healthy 40-year-old man might cost $45/month. And for a 40-year-old smoker, it could jump to $130/month or higher.
6. Is there a way to get coverage without a medical exam?
Yes, but it comes with trade-offs. No-exam policies (sometimes called simplified issue or guaranteed issue) skip the blood tests and physical. In exchange, they typically cost 20% to 40% more than medically underwritten policies and cap coverage at lower amounts, often $500,000 to $1,000,000.
If you’re healthy and qualify for standard rates, a medically underwritten policy saves you money. If you have health conditions that make traditional underwriting difficult, or if you need coverage quickly (no-exam policies can be issued in days versus weeks), the convenience might be worth the extra cost.
Some insurers now use “accelerated underwriting” that pulls your health data from electronic records instead of requiring a physical exam. This gives you exam-free speed at close to traditional pricing. Ask about it.
Policy Features and Riders
7. Can I convert my term policy to permanent insurance later?
Most quality term policies include a conversion privilege that lets you switch to a permanent policy without a new medical exam. This matters because your health might change. If you develop a serious condition during your term, the conversion option lets you extend coverage for life without proving insurability again.
Key details to nail down: How long is the conversion window? (Some policies only allow conversion during the first 10 or 15 years.) What permanent products can you convert to? Is the conversion at your original health rating or your current age? Get the specifics in writing before you buy.
8. What riders should I consider adding to my policy?
Riders are optional add-ons that customize your coverage. Not all of them are worth the cost, but a few are genuinely valuable.
Worth considering:
- Waiver of premium: If you become disabled and can’t work, this rider waives your premiums while keeping your coverage active. Usually adds $3 to $8/month.
- Accelerated death benefit: Lets you access a portion of your death benefit while alive if you’re diagnosed with a terminal illness. Many policies include this at no extra cost.
- Child term rider: Covers all your children under one affordable rider, typically $10,000 to $25,000 per child for $3 to $5/month total.
Usually not worth it:
- Return of premium rider: Refunds your premiums if you outlive the term. Sounds great, but the extra cost (30% to 50% higher premiums) invested elsewhere almost always produces more money.
- Accidental death benefit: Doubles the payout for accidental death. Sounds appealing, but your family needs the same amount of money regardless of how you die. It’s a marketing gimmick in most cases.
9. What happens when my term policy expires?
When your term ends, you have three options: let it lapse (most common), renew at a much higher annual rate, or convert to permanent insurance (if your policy includes conversion and you’re still within the window).
Renewal rates after a term expires are dramatically higher because they’re based on your current age. A $35/month policy can jump to $300+ per month at renewal. The idea is that by the time your term expires, your financial obligations have decreased (mortgage paid down, kids graduated) and you no longer need the same coverage. Plan for this from the start rather than being surprised at the end.
Beneficiaries and Payouts
10. How should I designate my beneficiaries?
This is more nuanced than it seems. You’ll name a primary beneficiary (who gets the payout first) and a contingent beneficiary (who receives it if the primary beneficiary has also passed).
For married parents, the common setup is: spouse as primary, children (in trust) as contingent. Important note: never name minor children as direct beneficiaries. Minors can’t legally receive insurance proceeds, so the court will appoint a guardian to manage the money, which creates delays, legal fees, and potential complications. Instead, name a trust for your children and work with an attorney to establish one.
Also, review your beneficiary designations every 2 to 3 years or after any major life event (marriage, divorce, birth, death). Your beneficiary designation overrides your will, so an outdated designation can send money to the wrong person.
11. How and when does the death benefit get paid out?
Most life insurance claims are paid within 30 to 60 days of submitting a complete claim. The beneficiary contacts the insurer, submits a certified death certificate and a claim form, and the insurer processes the payment.
Beneficiaries can typically choose: a lump sum (most common), installments over time, or an interest-bearing account they can withdraw from as needed. For large payouts, some financial advisors recommend taking the lump sum and placing it in a high-yield savings account while you make longer-term decisions. Don’t let the insurance company hold your money in their low-interest account.
12. Are life insurance payouts taxable?
Generally, no. Life insurance death benefits paid to a named beneficiary are income tax-free under federal law. This is one of life insurance’s biggest advantages.
However, there are exceptions. If the policy is owned by the deceased and the estate is the beneficiary, the proceeds may be subject to estate taxes (relevant only for estates over $13.61 million in 2026). Interest earned on proceeds held by the insurance company is taxable. And if you sell a permanent policy (a life settlement), the proceeds may be partially taxable.
For the vast majority of families with straightforward beneficiary designations, the full death benefit arrives tax-free. But if your estate is complex, consult a tax professional.
Comparing and Choosing a Policy
13. How do I compare policies from different companies?
Comparing life insurance isn’t as simple as finding the lowest premium. You’re also comparing the insurer’s financial strength, claims-paying track record, policy features, and conversion options.
Start with the premium for identical coverage (same amount, same term, same health rating). Then check the insurer’s financial strength ratings from AM Best (aim for A or higher), Standard & Poor’s, and Moody’s. A policy is only as good as the company’s ability to pay the claim in 20 or 30 years.
Compare rider options, conversion privileges, and any policy-specific exclusions. Get at least three quotes from different insurers. Online quote tools make this easy, but verify the final price through an actual application, because quoted rates are based on assumed health classifications that may change after underwriting.
14. Should I buy through an independent agent or directly from an insurer?
Independent agents represent multiple insurance companies and can shop the market for you. Captive agents work for one company. Direct purchases skip the agent entirely.
For most buyers, an independent agent offers the best combination of choice and advice. They can compare 10 to 20 insurers and match you with the one that rates your specific health profile most favorably. This matters because insurers evaluate health differently. One company might rate a well-controlled diabetic as standard, while another rates them as high-risk.
The cost is the same whether you buy through an agent or directly. Agent commissions are built into the premium either way. So you might as well get the comparison shopping and advice for free.
15. What questions should I ask about the insurer’s financial stability?
You’re buying a promise that a company will pay a claim 10, 20, or 30 years from now. Their financial stability matters more than the price.
Ask your agent (or check yourself): What is the company’s AM Best rating? (A or higher is strong.) How long have they been in business? What is their claims-paying ratio? Have they ever failed to pay a valid claim?
Companies rated A+ or A++ by AM Best have demonstrated superior ability to meet ongoing obligations. Avoid anything rated below A-. You can look up ratings for free at ambest.com. This takes 60 seconds and protects your family’s financial future.
What to Mention or Send Beforehand
Sharing these details before your meeting results in more accurate quotes and a more productive conversation.
- Your health profile. Height, weight, blood pressure, cholesterol levels, current medications, and any diagnosed conditions. Include family health history (parents and siblings) for conditions like heart disease, cancer, or diabetes.
- Your financial obligations. Mortgage balance, car loans, student loans, credit card debt, and any other liabilities your family would need to cover.
- Your income and your spouse’s income. The agent needs both to calculate how much income replacement coverage your family actually needs.
- Existing life insurance coverage. Include any employer-provided group life insurance (usually 1 to 2 times your salary) and any individual policies you already own.
- Your beneficiary preferences. Who you want to receive the payout and in what proportions. If minor children are involved, mention whether you have a trust established.
Typical Cost Range and Factors
Life insurance pricing varies enormously based on your age, health, coverage amount, and policy type. Here’s what to expect in 2026.
20-Year Term Life Insurance (monthly premiums for a healthy non-smoker):
- Age 30, $500,000 coverage: $20 to $30/month
- Age 35, $500,000 coverage: $25 to $40/month
- Age 40, $500,000 coverage: $35 to $55/month
- Age 45, $500,000 coverage: $55 to $85/month
- Age 50, $500,000 coverage: $90 to $140/month
30-Year Term Life Insurance: Roughly 30% to 50% more than 20-year term for the same coverage amount and age.
Whole Life Insurance: 5 to 15 times the cost of equivalent term coverage. A $500,000 whole life policy for a healthy 35-year-old runs $350 to $600/month.
Key Pricing Factors:
- Age: Premiums increase 4% to 8% per year of age
- Health: Conditions like diabetes, high blood pressure, or obesity increase rates 25% to 200%+
- Smoking: Doubles or triples premiums across the board
- Gender: Women typically pay 15% to 25% less than men at the same age
- Coverage amount: Rates scale roughly proportionally (doubling coverage roughly doubles premium)
- Term length: Longer terms cost more because the insurer’s risk exposure increases
Red Flags vs. Green Flags
| Red Flag | Green Flag |
|---|---|
| They push whole life insurance without understanding your situation. Whole life pays much higher agent commissions than term. If an agent recommends permanent insurance before asking about your debts, dependents, and budget, they’re selling, not advising. | They recommend term insurance for most families and only suggest permanent coverage when there’s a specific, documented reason (estate planning, business succession, lifelong dependent). |
| They won’t show you quotes from multiple companies. A captive agent representing one insurer can’t shop the market. You deserve options. | They compare quotes from multiple insurers and explain why one company might rate your health profile more favorably than another. |
| They pressure you to buy today. Life insurance isn’t a limited-time offer. High-pressure tactics signal commission desperation, not client advocacy. | They give you time to compare, review, and consult with your spouse before making a decision. They follow up without pressuring. |
| They can’t explain what happens when the term expires. If the agent doesn’t proactively discuss renewal rates and conversion options, they’re selling a product, not building a plan. | They walk you through the entire policy lifecycle, including what happens at term expiration, how conversion works, and when you might no longer need coverage. |
| They recommend a return of premium rider as a “no-brainer.” The math rarely works in your favor. The extra premium invested independently almost always produces more money. | They run the actual numbers on riders and show you when each one is worth the cost and when it isn’t. |
| The insurer has a low AM Best rating (below A-). Financial stability matters when you’re buying a 20- to 30-year promise. | The insurer has an AM Best rating of A or higher and a long track record of paying claims. |
Money-Saving Tips
- Buy young and healthy. Every year you wait costs 4% to 8% more in premiums. If you’re healthy today, lock in that rate now. Waiting “until you need it” is the most expensive approach.
- Choose term over whole life for pure protection. A 35-year-old who buys $500,000 in 20-year term at $35/month instead of $500,000 whole life at $450/month saves $415/month. Investing that difference in an index fund historically produces more wealth than a whole life cash value.
- Compare at least three to five quotes. Premiums for identical coverage vary 20% to 40% between insurers because each company evaluates health risk differently. An independent agent or online comparison tool makes this easy.
- Improve your health before applying. Losing weight, lowering cholesterol, and quitting smoking can move you from a substandard to a preferred health class, saving 20% to 50% on premiums. Even a 3-month effort before applying can pay off.
- Layer your coverage with multiple policies. Instead of one $1 million, 30-year policy, consider a $500,000/30-year policy plus a $500,000/20-year policy. As your financial obligations decrease, the shorter policy expires and your total premium drops. This approach often saves 15% to 25% over a single large policy.
- Skip unnecessary riders. Evaluate each rider on its math, not its emotional appeal. Waiver of premium is usually worth it. Return of premium is usually not. Accidental death benefit almost never is.
Quick Reference Checklist
Policy Type and Coverage
- Term or permanent: which type fits my situation?
- Coverage amount calculated based on actual financial needs?
- Term length matches my longest financial obligation?
Premiums and Costs
- Premium amount and whether it’s locked or variable?
- Factors affecting my specific rate understood?
- No-exam options explored if applicable?
Features and Riders
- Conversion privilege details confirmed?
- Riders evaluated on cost versus benefit?
- What happens at term expiration understood?
Beneficiaries and Payouts
- Primary and contingent beneficiaries designated?
- Payout options and timeline understood?
- Tax implications clarified?
Comparison and Selection
- At least three quotes compared?
- Insurer’s AM Best rating verified (A or higher)?
- Independent agent versus direct purchase considered?
Glossary
Term Life Insurance: Life insurance that provides coverage for a specific period (10, 20, or 30 years). If you die during the term, your beneficiaries receive the death benefit. If you outlive the term, coverage ends with no payout. Term insurance is the most affordable type of life insurance.
Whole Life Insurance: A type of permanent life insurance with a guaranteed death benefit, fixed premiums, and a cash value component that grows at a guaranteed rate. Premiums are significantly higher than term insurance. Whole life is appropriate for specific estate planning and business needs, but it’s often oversold to families who would be better served by term coverage.
Rider: An optional add-on to a life insurance policy that provides additional benefits or modifies existing coverage. Common riders include waiver of premium (waives premiums if you’re disabled), accelerated death benefit (access funds if terminally ill), and child term (covers your children under your policy).
Underwriting: The process by which an insurance company evaluates your application, health, and risk factors to determine whether to insure you and at what premium rate. Underwriting may include a medical exam, blood tests, medical record review, and prescription database checks.
Death Benefit: The amount paid to your beneficiaries when you die. For term insurance, the death benefit is the face value of the policy. For permanent insurance, it may include the face value plus accumulated dividends or bonuses, depending on the policy type.
Cash Value: The savings component of a permanent life insurance policy that accumulates over time. Cash value grows tax-deferred and can be borrowed against or withdrawn. However, accessing cash value reduces the death benefit and may trigger tax consequences.
Helpful Tools and Resources
Store your life insurance policy, beneficiary designations, and estate planning documents in a fireproof safe. Your family needs to find these documents quickly if something happens.
An estate planning binder consolidates your life insurance policies, will, power of attorney, account information, and beneficiary details in one place your family can find.
Keep all your family's important documents sorted: insurance policies, medical records, financial accounts, and legal documents. Saves your family from a frantic search during an already difficult time.
- Life Happens Life Insurance Calculator - A free calculator that helps you estimate how much coverage your family needs based on income, debts, and future expenses. Simple and unbiased.
- AM Best Company Search - Look up any life insurance company’s financial strength rating. Stick with companies rated A or higher for long-term peace of mind.
- NAIC Life Insurance Buyer’s Guide - A free, state-regulator-backed guide that explains policy types, how to compare quotes, and what to watch out for. No sales pitch.
- Policygenius - An independent comparison marketplace where you can get quotes from multiple insurers in one place. Useful for seeing the range of available pricing.
Frequently Asked Questions
How much life insurance does the average family need?
There’s no single answer, but most financial planners recommend 10 to 15 times the primary earner’s annual income as a starting point. A more precise approach calculates your family’s specific needs: mortgage payoff, debts, income replacement, childcare, education funding, and final expenses, minus existing assets. For a family earning $80,000 with two kids and a mortgage, coverage of $750,000 to $1,000,000 is typical.
Is life insurance worth it if I’m single with no dependents?
If nobody depends on your income, you likely don’t need life insurance right now. The exception is if you want to lock in low rates while you’re young and healthy for future needs (marriage, children). A small term policy at 25 costs very little and guarantees insurability. But it’s not urgent.
Can I have more than one life insurance policy?
Yes. Many people hold multiple policies, and there’s no rule against it. Layering policies (for example, a $500,000/30-year term and a $500,000/20-year term) is a smart strategy that lets coverage step down as your financial obligations decrease. Just make sure the total coverage amount is justified by your actual needs, because insurers will verify this during underwriting.
What happens if I miss a premium payment?
Most policies include a grace period of 30 to 31 days after a missed payment. During the grace period, your coverage stays active. If you still haven’t paid after the grace period, the policy lapses. Some policies offer reinstatement within a certain window (often 3 to 5 years), but you may need to prove insurability again. Set up autopay to avoid this risk.
Should I buy life insurance through my employer?
Employer group life insurance (typically 1 to 2 times your salary) is a great free or low-cost benefit, but it usually isn’t enough on its own. The bigger issue: it’s not portable. When you leave the job, the coverage usually ends. Relying solely on employer coverage means you’re uninsured the moment you change jobs, and your health may have changed by then. Use employer coverage as a supplement, not a replacement, for your own individual policy.
Disclaimer: This article is for educational purposes only and does not constitute financial or insurance advice. Life insurance needs, costs, and policy features vary based on individual circumstances. Consult with a licensed insurance professional or financial advisor before purchasing life insurance. Information reflects general guidance as of early 2026 and may change.