Health, life and income · Term, whole, universal
Life insurance
Pays a set amount of money to the people you choose if you die, so your family can keep paying the mortgage, childcare or school.
- Who it's for
- People whose family depends on their income or unpaid work, such as parents, and people with shared debts like a mortgage.
- Is it required?
- No. Employers often include a small amount, often one or two times your salary, which usually ends when you leave the job.
Covered and not covered
Usually covered
- Death from almost any cause, including illness and accidents
- Payment to your beneficiaries, usually tax-free
Usually not covered
- Suicide in the first two years of the policy (one year in some states)
- Death when the application contained false answers, if the insurer finds out within the contestability period, usually two years
- Death after a term policy has ended
- Some policies exclude dangerous activities, like private flying
Real-life examples
A parent with a 20-year term policy dies of cancer in year 8.
Usually coveredThe full amount is paid to the beneficiaries. Illness is covered like any other cause.
Your 20-year term policy ended last year.
Usually not coveredA term policy only pays during its term. Many can be renewed or converted, at a higher price.
Term or permanent?
| Compare | Term | Permanent (whole, universal) |
|---|---|---|
| How long | A set period, like 20 or 30 years | For life, as long as premiums are paid |
| Cost for the same payout | Low | Many times higher |
| Savings part | None | Builds cash value you can borrow against |
| Typical use | Replacing income while children grow up or a mortgage is paid | Estate planning, or lifelong dependents |
Check your own policy
Find these on your policy or declarations page, or ask your agent:
- The amount and the end date
- Who the beneficiaries are, and that they're up to date
- Whether your work life insurance ends if you change jobs
Not sure where to look? See how to read your policy.