Life insurance, without the sales theater.

Term life

Term insurance covers you for a defined period — commonly 10, 20 or 30 years — and pays a death benefit if you die during that term. If you outlive it, the coverage simply ends. That is not a flaw; it is the design. Term is inexpensive precisely because most policies never pay a claim.

The logic is that financial exposure is temporary for most families. A 34-year-old with a mortgage, two children under ten and a spouse who could not carry the household alone is in a very different position than the same person at 64, with the house paid off, the kids grown and retirement funded. Term covers the years of maximum exposure at the lowest cost per dollar of protection.

Practical notes: choose a term that ends when your exposure does — often when the mortgage is paid or the youngest child finishes school. Look for a policy that is convertible, meaning you can exchange it for permanent coverage later without new medical underwriting. And buy while you are young and healthy; premium is priced off your age and health at issue and does not increase during the level term.

Whole life

Whole life is permanent coverage. As long as premiums are paid, the policy stays in force for your whole life, the premium is level, and the policy accumulates cash value you can borrow against or withdraw under the policy's terms. It costs considerably more per dollar of death benefit than term, because it is guaranteed to pay eventually.

It fits specific jobs well. Final expenses that a family will face regardless of age. A lifelong dependent, such as a child with special needs. Business continuity — funding a buy-sell agreement between partners. Estate liquidity, so heirs are not forced to sell an asset quickly. It also appeals to people who simply want the certainty that the coverage cannot expire.

What whole life is not, in most cases, is a first-choice investment vehicle. Cash value builds slowly in the early years and the internal costs are real. If someone is presenting it primarily as a return-generating product, ask for the guaranteed column of the illustration — not the projected one.

How much coverage do you need?

Rules of thumb ("ten times income") are a starting point, not an answer. Build the number from what it has to do:

• Income replacement — the share of your income the household actually depends on, times the number of years it must continue
• Debt payoff — mortgage, vehicles, credit cards, business debt you personally guaranteed
• Final expenses — funeral, medical bills, estate settlement costs
• Future obligations — college, care for an aging parent, a dependent with ongoing needs
• Minus what already exists — savings, retirement accounts, and any group life through work

Do not forget a non-earning spouse. If a stay-at-home parent died, the surviving parent faces childcare, transportation and household costs that were previously invisible in the budget. That is a real, insurable expense.

A worked example

Consider a fictional Tulsa-area household. Dana is 36, earns $70,000, and is married to Chris, who earns $45,000. They have two children, ages 6 and 9, and $210,000 remaining on their mortgage.

• Income replacement for Dana: about 70% of $70,000 for 15 years, until the younger child is grown — roughly $735,000
• Mortgage payoff: $210,000
• College support, two children at $40,000 each: $80,000
• Final expenses: $20,000
• Subtotal: $1,045,000
• Less existing resources — $60,000 in savings and $70,000 of group life through work: −$130,000

The gap is roughly $915,000, so a $900,000 to $1,000,000 20-year term policy on Dana is the sensible core. Chris needs coverage too — a smaller term policy, sized to their income and to the childcare costs that would appear immediately. Because the mortgage amortizes and the children age out, this need shrinks over time, which is exactly why term rather than permanent coverage carries the bulk of it.

Numbers are illustrative only. Your own figures, health and carrier underwriting determine actual premium and availability.

Common mistakes

• Relying only on group life at work. It is usually one or two times salary, and it typically ends when the job does.
• Waiting for a "better time." Premium rises with age, and a diagnosis between now and then can change what you qualify for entirely.
• Insuring only the higher earner. Both parents create economic value; only one of them shows up on a pay stub.
• Never updating beneficiaries. The beneficiary designation controls the money, not your will. Review it after a marriage, divorce or birth.
• Buying permanent coverage for a temporary need — or buying so much permanent coverage that the premium becomes unsustainable and the policy lapses.
• Not telling anyone the policy exists. A death benefit nobody knows to claim helps no one. Tell your spouse where the paperwork is.