Frequently Asked Questions

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.

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.

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

Most financial advisors recommend term life for income replacement. Buy coverage equal to what your family needs, for the years they need it. Whole life is more appropriate for estate planning, business succession, or legacy goals.

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. Have individual portable coverage as your primary protection.

Insurers classify applicants into health classes (Preferred Plus, Preferred, Standard Plus, Standard) based on health history, family history, BMI, cholesterol, blood pressure, and tobacco use. Preferred Plus applicants pay 30–50% less than Standard rates.

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

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 while reducing premiums as obligations decrease over time.

The earlier the better. Premiums increase with age, and health conditions can raise costs significantly. Most planners recommend securing coverage in your 20s or 30s when premiums are lowest.