Life Insurance

Life insurance solves specific problems. Different problems need different tools.

Life insurance gets sold more than it gets planned. We start with the question most agents skip: what problem is this policy supposed to solve? Income replacement, mortgage payoff, estate liquidity, business continuity, and legacy goals are all different problems, and they call for different structures.

Term vs. permanent in plain terms

Two main categories, two different jobs.

• Term insurance is rented coverage. You lock in a level premium for a defined period (commonly 10, 20, or 30 years). If you die during the term, your family gets the death benefit. If you outlive the term, the coverage ends. Cheap, simple, and the right answer for most working-age families who need income replacement while kids are at home and the mortgage is being paid down.
• Permanent insurance is owned coverage with a cash-value bucket. Whole life, universal life (UL), and indexed universal life (IUL) all fall here. The premiums are meaningfully higher because the policy is designed to last a lifetime and accumulate value. Useful in specific situations. Not a great substitute for a brokerage account or a 401(k).

A common pattern: term handles the next 20 years; if a permanent need still exists (estate, business, legacy), a smaller permanent policy is layered on top.

Sizing coverage: the DIME method and beyond

A starter framework most planners reach for is DIME:

• Debt: everything outside the mortgage (credit cards, student loans, car loans, business debt)
• Income: years of income replacement needed for the surviving spouse and kids
• Mortgage: enough to pay off the home so the surviving spouse can stay
• Education: future college costs for each child

DIME gets you to a reasonable number for most households. For higher-income or higher-net-worth families, we also add:

• Estate liquidity (cash to pay taxes or settle illiquid assets without a fire sale)
• Business obligations (buy-sell funding, key person, partner buyouts)
• Charitable bequests, if legacy giving is part of the plan
• A “stay home with the kids” cushion for a surviving spouse who may want time off work

When permanent makes sense

Permanent insurance is a legitimate tool for a few specific jobs:

• Estate liquidity for families whose taxable estate may approach the federal exemption. The exemption was permanently set at $15 million per person (married couples $30 million) by the One Big Beautiful Bill Act in 2025, indexed for inflation. That removes the looming TCJA sunset, but families with concentrated illiquid assets (real estate, closely held businesses) still need cash to settle the estate even when no federal estate tax is owed.
• Buy-sell funding for business partners. A permanent policy provides the cash to buy out a deceased partner’s interest cleanly.
• Charitable strategies where a policy is gifted to a charity or used inside a more complex giving plan.
• Supplemental retirement income for high earners who are already maxing qualified plans, who have a long time horizon, and who understand that the projected outcomes depend on policy charges, crediting rates, and consistent funding.

We’re careful here. Permanent policies are expensive and complex, and they tend to get sold to people who don’t have the problem they’re built to solve. We’d rather you skip it than overbuy.

Common pitfalls

• Treating whole life as an “investment” without understanding how cash-value accumulation actually works in the first decade. The internal rate of return on most policies is unattractive in years 1-10 and gets reasonable only with long holding periods.
• Naming a minor child directly as a beneficiary. The death benefit then sits in court-supervised guardianship, with significant friction and cost. A trust or a custodial arrangement is almost always the right answer.
• No contingent beneficiary listed. If the primary predeceases you, the death benefit goes to the estate, which means probate.
• Not coordinating the policy with the will and trust. The beneficiary form on the policy overrides the will. If they don’t match, the will loses.

Real numbers: 2026 term life premium ranges

Premiums are quoted off health class, gender, age, term length, and face amount. Very rough ranges for a healthy, non-smoking 40-year-old, 20-year level term, $500,000 face, as of recent industry data (CareScout, MoneyGeek, NerdWallet, ValuePenguin):

• Male, preferred or standard health: roughly $25 to $50 per month, depending on carrier and underwriting class
• Female, preferred or standard health: roughly $20 to $40 per month

These are illustrative, not quotes. Actual premiums depend on the full underwriting picture, including height/weight, family history, prescriptions, and lab results. Carriers also price differently year to year and class to class. The price gap between “preferred plus” and “standard” can easily be 30-40%, which is why we usually shop more than one carrier and review the underwriting offer before committing.