Life Insurance 101: The Basics Explained

What is the difference between term and whole life insurance?

Term life covers you for a specific period (10, 20, or 30 years) and is 5-15x cheaper than whole life. Whole life covers you permanently and builds cash value over time. Most financial advisors recommend term life for the majority of families — the savings can be invested elsewhere for better returns.

How much life insurance do I need?

A common guideline is 10-15 times your annual income, but the right amount depends on your debts, number of dependents, spouse's income, and future expenses like college tuition. A more precise method: add up all financial obligations your family would face, subtract existing assets, and the gap is your coverage target.

Do I need a medical exam for life insurance?

Not always. Many insurers now offer "no-exam" policies that use health questionnaires, prescription databases, and motor vehicle records instead. No-exam policies are faster (approval in days vs. weeks) but typically cost 10-25% more than fully underwritten policies for the same coverage amount.

Can I get life insurance with pre-existing conditions?

Yes, though premiums will be higher. Common conditions like diabetes, high blood pressure, and depression are routinely covered. Insurers assess severity, how well the condition is managed, and time since diagnosis. Guaranteed issue policies accept everyone regardless of health but have lower coverage limits and higher costs.