Life Insurance Basics
What kind of life insurance do I need?
There are two types of life insurance: term life insurance, and permanent life insurance.
Term life insurance is the most simple and affordable option. It provides coverage for a set period of time or “term”, typically 10–30 years, and is designed to protect your dependents. If you pass away during the term period, your beneficiaries receive a cash payment (the "death benefit") to cover any expenses.
Permanent life insurance is complex and costly (often ten to fifteen times more expensive than term life insurance). It provides coverage in a set amount for your entire life and is sometimes used as an investment vehicle. Some insurers invest your premium payments and the interest earned on those investments goes back into your policy as accrued cash value. Please note: when choosing this type of policy, you should be prepared to assume meaningful levels of risk.
Some permanent life insurance policies let you borrow against the accrued cash value (surrender the policy for a cash payment). But if you don’t repay the amount borrowed with interest before you pass away, the amount paid to your beneficiaries will be reduced.
Because our mission is to protect vulnerable families, Ethos offers term life insurance and recommends it particularly if:
You need coverage to replace your income over a fixed period of time (like when you’re raising children or paying off a mortgage)
You want the most affordable coverage
You want a more streamlined and straightforward process