Question 1

How much life insurance do I need?

Accepted Answer

Most financial planners recommend 10–12× your annual income as a starting point. More precise methods like the DIME method (Debt + Income + Mortgage + Education) or our income replacement calculator factor in your specific debts, dependents, and savings.

Question 2

What is the DIME method for life insurance?

Accepted Answer

DIME stands for Debt, Income, Mortgage, and Education. You add up all debts (excluding your mortgage), the present value of income replacement for your earning years, your mortgage balance, and education funds for each child. The total is your recommended coverage amount.

Question 3

What is the difference between term and whole life insurance?

Accepted Answer

Term life provides coverage for a fixed period (10–30 years) and has no cash value. It is significantly cheaper than whole life. Whole life (permanent insurance) covers you for life, builds a cash value component, and costs 5–15× more per month for the same coverage.

Question 4

Should I buy term or whole life insurance?

Accepted Answer

Most financial advisors recommend term life for income replacement purposes. Buy coverage equal to what your family needs, for the years they need it. Whole life is appropriate for estate planning, business succession, or legacy goals — not as a primary income replacement tool.

Question 5

Does employer life insurance count toward my coverage need?

Accepted Answer

Employer coverage can supplement your need, but should not be your primary source — it is typically not portable and is lost if you change jobs or are laid off. It is best to have portable individual coverage as your primary protection.

Question 6

How does my health class affect my premium?

Accepted Answer

Insurers classify applicants into health classes during underwriting — Preferred Plus, Preferred, Standard Plus, and Standard. Your class is based on your health history, family history, BMI, cholesterol, blood pressure, and tobacco use. Preferred Plus applicants pay the lowest premiums, often 30–50% less than Standard rates.

Question 7

Is the life insurance death benefit taxable?

Accepted Answer

Federal income tax: generally no — life insurance death benefits paid to a named beneficiary are income-tax-free. Estate tax: the benefit may be included in the estate for estate tax purposes if the insured owned the policy. An irrevocable life insurance trust (ILIT) can help avoid this.

Question 8

Can I have more than one life insurance policy?

Accepted Answer

Yes. Layering policies (e.g., a 30-year policy + a 20-year policy) is a common strategy to have higher coverage during high-need years (young children, large mortgage) while reducing premiums once those obligations decrease.

Question 9

What is the right age to buy life insurance?

Accepted Answer

The earlier the better. Premiums increase with age, and health conditions later in life can disqualify you or dramatically increase your cost. Most financial planners recommend securing coverage in your 20s or 30s when premiums are lowest.

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