Frequently Asked Life Insurance Questions

As a general rule, if you're the primary breadwinner of the house and there are people who depend on you for financial support, like a spouse, children, or aging parents, then you’re a good candidate for life insurance. Additionally, if you have debt that another person will have to assume, like a mortgage or student loan debts, it's a good opportunity to look into life insurance.

The premiums you pay for your life insurance policy are not tax deductible.

Term is basic life insurance, the kind you’d probably think of if someone asked you to describe the concept. You pay a premium and in return the insurer guarantees to pay your beneficiary a lump sum of money if you die while the policy is in effect.

Term policies are sold for specific lengths of time, usually between 10 and 30 years. Once the term expires, you stop paying premiums and the policy is no longer in effect.

Permanent life insurance never expires, and it includes a “cash value” component that grows (or in some cases shrinks) over the life of the policy. This cash value means you can do things like borrow against your policy or cancel the policy for part of the cash value after a period of time.

The best time to buy life insurance is as soon as you need it—in other words, decide when to buy it strictly based on your needs. While it’s true that the younger you are, the less you pay for life insurance, you should only buy it once you’ve determined there’s a need for it (for example, if you’ve started a family).

It’s impossible to say, because the kind of coverage that’s right for you depends on your circumstances and financial goals. But, generally speaking, term offers the greatest coverage for the lowest initial premium and is a great solution for people with temporary needs or a limited budget. Permanent insurance may make more sense if you anticipate a need for lifelong protection, or if the option of accumulating tax-deferred cash values is attractive to you.

The length of your term life insurance policy depends on the unique needs of your personal situation. Term life insurance can last anywhere from 5 to 40 years, depending on your age.