Guide: How to choose the right type of life insurance

Choosing the right type of life insurance can be confusing, but it’s also an important decision. Here are some guidelines that can help you choose the right life insurance policy.

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Choosing your coverage amount and term length
Everyone’s situation is unique. You should choose a term length that covers the span of your financial obligations. For example, choosing a 20-year term to cover your mortgage.

Thankfully, calculating how much life insurance you should buy is fairly straightforward. Experts recommend simply multiplying your current salary by 10. So if you make $50K/year, you would want to apply for $500K-$600K in coverage.

Alternatively, you could add up all of your current assets, debts, and future expenses like your child’s college tuition to get a sense of everything you’d need to cover. Still not sure? Try our coverage calculator.

Example things to consider when deciding your term length:

  • The lengths of any debts, like a mortgage or student loans
  • How long your children might be dependent on you
  • How long it will take for you to accrue other assets

If you’re young and healthy, we recommend choosing a longer-term, between 20-30 years. We suggest you lock down a lower rate now.

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Choosing the right type of life insurance
While term life insurance is the best option for most people, there are situations in which a whole life insurance policy might be a better fit.

You should get term life insurance if you:

  • Want to provide your beneficiaries with money to cover your income or other contributions
  • Need coverage for a certain amount of time, like until your children are financially independent
  • Want an affordable life insurance option

You should get whole life insurance if you:

  • Want to cover estate taxes for your beneficiaries
  • Will need to support someone their entire life, like a child with special needs
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