How Much Term Life Insurance Do I Need?
Calculate how much term life insurance coverage you need. DIME method (Debt + Income + Mortgage + Education) and income replacement methodology.
Term Life Insurance Buying Guide
Term Life vs Whole Life — Choose Term
Term life insurance: pure death benefit. Pay premiums for set term (10-30 years), beneficiaries receive payout if you die during term. Cheap. Whole life / universal life / variable life: combines insurance with cash value investment component. Premiums 5-15x higher than term. Cash value grows slowly. The case for term: needs are TIME-LIMITED — you need coverage when kids are young and dependent, mortgage is high, retirement assets are low. By age 60-65, kids are independent, mortgage paid down,
How Much Coverage
DIME method: Debt + Income + Mortgage + Education = total coverage need. Debt: cards, auto, student loans, personal loans. Income: 10-15x annual income (or sum of years until retirement × income). Mortgage: full remaining balance. Education: $50-100k per child for college. Subtract: existing savings/investments, existing life coverage from employer, Social Security survivor benefits (~$2,000/month per child plus surviving parent). Typical needs: $500k coverage for moderate-income household with
Term Length Selection
10-year term: cheapest, suitable for older folks with limited remaining work years. 20-year term: most common, fits child-raising period if buying in your 30s. 30-year term: locks in young-age rates for long duration, suitable for 20s/early 30s with new families and long mortgage. Strategy: ladder term policies. Example at age 35: $500k 30-year term ($45/mo) + $500k 20-year term ($25/mo) + $500k 10-year term ($15/mo). Total $1.5M coverage now, $85/mo. After 10 years, drops to $1M. After 20 years
How to Shop for Term Life
Process: get medical exam-required term life (exam-free is more expensive). Use a broker who shops multiple carriers (Term4Sale, Quotacy, Policygenius, Haven Life are major direct-to-consumer brokers). Top-rated carriers: Northwestern Mutual, Pacific Life, Banner Life, Protective, Symetra, AIG. Health rating tiers: Preferred Plus (top 10% health), Preferred, Standard Plus, Standard, Substandard. Underwriting takes 4-8 weeks typically. AVOID: salesperson pushing whole life; mortgage life insuranc
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