When I sit down with families who are asking questions about life insurance, I’ve noticed the same patterns emerge time and time again. Most people have heard they “should” have life insurance, but they’re not quite sure what that means for their specific situation. Over the years, I’ve helped hundreds of families navigate these waters, and I want to share what I’ve learned to help you make the best decision for your family.
For a complete overview, see how final expense insurance works.
The truth is, life insurance doesn’t have to be complicated or overwhelming. But like most financial products, there are nuances that matter. Let me walk you through the most common questions I hear and give you the straight answers you need.
What Is Life Insurance Really For?
This might seem like an obvious question, but I’m surprised how many people can’t give me a clear answer when I ask them directly. Life insurance serves one primary purpose: to replace your income and protect your family’s financial future if something happens to you.
Think of it this way—if you died tomorrow, what would happen to your family’s lifestyle? Could they still pay the mortgage? Would your kids still be able to go to college? Would your spouse have to dramatically change their standard of living?
Life insurance fills that gap. It’s not about making your family rich—it’s about making sure they can maintain their current life without your income.
How Much Life Insurance Do You Actually Need?
This is probably the most common question on life insurance that I get, and the answer isn’t as simple as “10 times your income” like some online calculators suggest.
I help my clients think through several key factors:
Your Current Debts
- Mortgage balance
- Car loans
- Credit cards
- Student loans
Your Family’s Ongoing Expenses
- Monthly living costs
- Children’s education expenses
- Healthcare costs
- Your spouse’s retirement needs
Your Existing Assets
- 401k balances
- Savings accounts
- Other investments
- Existing life insurance through work
The goal is to bridge the gap between what your family would need and what they’d have available without your income. For most families, this ends up being somewhere between 7-12 times their annual income, but I’ve seen situations where much more or much less made sense.
Term vs. Permanent Life Insurance: Which Should You Choose?
This is where things get interesting, and where I see a lot of confusion. Let me break this down in a way that actually makes sense.
Term Life Insurance
Term insurance is pure protection. You pay a premium, and if you die during the term period (usually 10, 20, or 30 years), your family gets the death benefit. If you don’t die, the policy expires and you get nothing back.
When term makes sense:
- You have temporary needs (like a mortgage or young children)
- You’re on a tight budget
- You’re using it to bridge a gap until other assets build up
The catch with term: Most term policies become very expensive or unaffordable after the initial term period. And if your health changes, you might not be able to get new coverage.
Permanent Life Insurance
This includes whole life, universal life, and indexed universal life. These policies combine life insurance with a cash value component that builds over time.
When permanent coverage makes sense:
- You have lifelong dependents (like a special needs child)
- You want to leave a legacy regardless of when you die
- You’re looking for additional tax-advantaged savings
- You want the flexibility to access cash value during your lifetime
What Questions Should You Ask When Shopping for Life Insurance?
Based on my experience helping families, here are the key questions you need to ask any agent or company:
About the Company
- What’s the company’s financial strength rating?
- How long have they been in business?
- What’s their track record with paying claims?
About the Policy
- Is this term or permanent coverage?
- What happens to my rates over time?
- Are there any riders or additional benefits included?
- What are the surrender charges if I need to cancel?
About the Process
- Will I need a medical exam?
- How long does approval typically take?
- What happens if I’m not approved at the rate quoted?
- Can you show me options from multiple companies?
That last question is crucial. Any agent who only shows you one option isn’t doing their job properly.
Common Life Insurance Mistakes I See People Make
After helping so many families, I’ve noticed some patterns in the mistakes people make. I want to help you avoid these.
Mistake #1: Waiting Until It’s Too Late
Life insurance gets more expensive as you age, and health conditions can make you uninsurable. I’ve had too many conversations with people who waited until they had a heart attack or cancer diagnosis to look into coverage. Don’t wait.
Mistake #2: Only Relying on Work Coverage
Group life insurance through your employer is a great benefit, but it’s usually not enough. Most policies only provide 1-2 times your annual salary, and you lose it if you change jobs or get laid off.
Mistake #3: Buying the Wrong Type for Your Situation
I see people buying permanent life insurance when term would be perfect for their needs, and I see others buying term when they really need permanent coverage. This is why working with an independent agent matters—we can show you all your options.
Mistake #4: Not Being Honest on the Application
This is a big one. Some people think they can hide health conditions or lifestyle factors to get better rates. Here’s the truth: insurance companies share information, and they will find out. If you’re not honest on your application, they can deny claims or cancel your policy.
How Health Conditions Affect Your Life Insurance Options
One of the most frequent questions on life insurance I get is “Can I still get coverage if I have [health condition]?” The answer is almost always yes—but the type of coverage and cost will depend on your specific situation.
Let me give you some real examples:
Controlled High Blood Pressure or Cholesterol These are very common and usually don’t prevent you from getting good rates, especially if you’re managing them well with medication.
Type 2 Diabetes This used to be much more restrictive, but many companies now offer competitive rates for people with well-controlled diabetes, especially if diagnosed after age 40.
Cancer History This depends entirely on the type of cancer, how long ago it was treated, and whether there’s been any recurrence. Some cancers (like certain skin cancers) have minimal impact, while others require several years of being cancer-free.
Mental Health Conditions Depression and anxiety are much more accepted now than they used to be. If you’re stable on medication and able to work, many companies will offer coverage at competitive rates.
The key is working with an agent who knows which companies are most favorable for your specific situation.
The Application and Underwriting Process Explained
I like to prepare my clients for what to expect, because the life insurance application process can feel invasive if you don’t understand why they’re asking for all this information.
What to Expect
The Application This covers your health history, lifestyle, occupation, finances, and family medical history. Be thorough and honest—it’s better to over-disclose than under-disclose.
Medical Exam (For Larger Amounts) A paramedical examiner will come to your home or office to take basic measurements, blood, and urine samples. This is usually free and takes about 30 minutes.
Medical Records For certain conditions or larger amounts, the insurance company may request records from your doctors.
The Decision You might be approved as applied, approved at a different rate, or declined. If you’re declined by one company, that doesn’t mean you can’t get coverage elsewhere.
Life Insurance Riders: What’s Worth Adding?
Riders are additional benefits you can add to your base policy. Some are valuable, others are overpriced for what they provide. Here are the ones I most commonly recommend:
Waiver of Premium
If you become disabled and can’t work, this rider waives your premium payments while keeping your policy in force. It’s usually inexpensive and can be very valuable.
Accidental Death Benefit
This doubles or triples your death benefit if you die in an accident. I’m generally not a fan because your family needs the same amount regardless of how you die, but some people like the additional coverage.
Long-Term Care Rider
This allows you to access part of your death benefit early if you need long-term care. This can be valuable, but make sure you understand the terms and costs.
Term Conversion Rider
If you have term insurance, this allows you to convert to permanent coverage without medical underwriting. This can be crucial if your health changes.
How to Compare Life Insurance Companies and Policies
Not all life insurance companies are created equal. When I’m helping clients compare options, here’s what we look at:
Financial Strength Ratings
- A.M. Best (A++ to D)
- Standard & Poor’s (AAA to D)
- Moody’s (Aaa to C)
- Fitch (AAA to D)
Look for companies with ratings of A- or better from multiple agencies.
Claims Paying History
How quickly do they pay claims? What percentage of claims do they pay without contest? This information is available in their annual reports.
Customer Service
How easy is it to reach them? How do they handle policy changes and questions? Online reviews can give you insights here.
Product Features
Are the policy features competitive? Do they offer the riders you want? How do their rates compare over time?
Final Expense vs. Regular Life Insurance
I get a lot of questions about final expense insurance, especially from people over 50. Final expense policies are permanent life insurance policies designed to cover burial costs and other end-of-life expenses.
When final expense makes sense:
- You’re over 50 and in declining health
- You only need enough coverage for funeral costs ($10,000-$25,000)
- You can’t qualify for traditional life insurance
When regular life insurance is better:
- You’re in decent health
- You need more than $25,000 in coverage
- You want better value for your premium dollar
Final expense insurance is more expensive per dollar of coverage, but it’s easier to qualify for and provides guaranteed acceptance options.
Working With an Independent Agent vs. Captive Agents
This might sound self-serving since I’m an independent agent, but I think it’s important to understand the difference.
Captive agents work for one company and can only sell that company’s products. They might be very knowledgeable about their company’s offerings, but they can’t show you what else is available.
Independent agents like me work with multiple companies and can shop your case with different carriers to find the best fit for your situation.
When you’re making a decision that could impact your family for decades, doesn’t it make sense to see all your options?
Questions You Should Ask Any Life Insurance Agent
Before you work with any agent, here are some questions that will help you determine if they’re the right fit:
- How many companies do you represent?
- Will you shop my case with multiple carriers?
- What happens if I’m not approved at the rate you quoted?
- How long have you been selling life insurance?
- Will you be available to help with future policy questions and changes?
- What’s your process for determining how much coverage I need?
If an agent seems pushy, won’t answer your questions clearly, or is pushing you toward one specific product without explaining alternatives, find someone else.
- Calculate your life insurance needs by considering your debts, family expenses, and existing assets rather than relying on simple income multipliers, as most families need 7-12 times their annual income in coverage.
- Choose term life insurance for temporary needs like mortgages or young children when budget is tight, but understand that premiums become expensive after the initial term period.
- Consider permanent life insurance for lifelong financial obligations like special needs dependents or legacy planning, as it combines protection with cash value accumulation.
- Compare options from multiple insurers since coverage amounts, premiums, and terms vary significantly between companies, and bring any existing quotes to an independent agent for thorough review.
- Focus on income replacement as the primary purpose of life insurance to maintain your family’s current lifestyle and financial stability if something happens to you.
The Bottom Line on Life Insurance Questions
After years of helping families navigate life insurance decisions, here’s what I want you to remember: life insurance is not a one-size-fits-all product. Your situation is unique, and your coverage should reflect that.
The best time to get life insurance is when you don’t need it yet—when you’re young, healthy, and can get the best rates. But even if you’re older or have health conditions, there are usually options available.
Don’t let perfect be the enemy of good. Some coverage is almost always better than no coverage, even if it’s not exactly what you originally wanted.
And finally, work with someone who will take the time to understand your situation and show you options from multiple companies. Your family deserves that level of service.
Every family’s situation is different, which is why I don’t believe in one-size-fits-all solutions. As an independent agent, I’ll take the time to understand your needs and shop multiple carriers to find coverage that works for you.
Let’s find your best option together. Schedule a free consultation and get personalized recommendations based on your specific situation and goals.
