Most people vastly overestimate the cost of life insurance—often by 300% or more. In reality, the price depends on your unique circumstances. Key factors that influence your premium include your coverage amount, policy term, age, health, and tobacco use. The earlier you secure a policy, the better—you’ll lock in the lowest rate and maximize your long-term savings.

Employer-sponsored life insurance typically provides coverage equal to just 1-2 times your annual salary—far less than what most families actually need. Plus, if you leave your job, that coverage usually ends. A common guideline suggests having at least 10 times your salary in life insurance, which is why many people choose to supplement their workplace policy with an individual term plan.

A simple way to estimate your life insurance needs is to multiply your annual income by 10. Alternatively, you can calculate your long-term financial obligations and subtract your existing assets—the difference is the coverage gap that life insurance should fill.

Term life insurance provides coverage for a set period, with premiums ensuring protection during that "term." If no claim is made within that time, the coverage expires. This option is ideal for those seeking affordable protection to replace lost income during crucial years, such as while raising children or paying off a mortgage.

Whole life insurance, on the other hand, offers lifelong coverage as long as premiums are paid. It also has the potential to build cash value over time, making it both a protection and investment tool. Due to these added benefits, whole life premiums are typically higher than term premiums for the same coverage amount.

Life insurance can provide crucial financial support by covering major expenses if you pass away while the policy is active. Beneficiaries often use the payout for mortgage payments, debts, tuition, and daily living costs. However, they have full control over how the funds are used. The proceeds are typically paid as a lump sum and are generally tax-free.

After separating employment or turning age 59, companies allow you to move your money to another qualified plan that may be more aligned to your financial objections. These new plans may offer you guarantees on your account, including of your principal, pension like income, among other benefits. This does not trigger any taxes or penalties and often times there are no fees.