How to choose the right type of life insurance
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Choosing between term life and permanent life insurance
There are a few main types of life insurance. We’ll break down what each one means and how to know what type of life insurance coverage you need.

Permanent (whole) life insurance covers you for your whole life as long as you continue to pay your premiums. Whole life insurance can be great for some, but the premiums are often much higher than other types of life insurance.

Universal life insurance policies promise a certain death benefit, but typically have no cash value. Though universal life insurance can be less costly than whole life insurance, the premiums are still more expensive than term life insurance in many cases.

Term life insurance offers coverage at a much lower rate than other types of policies. Term coverage lasts for a predetermined term (i.e. 10, 15, 20, or 30 years). This type of coverage is often the most cost- effective and prioritizes giving you coverage when you need it most. Check out our in-depth comparison of term life insurance vs. permanent life insurance to learn more about the benefits of each and find which is right for you. Ethos offers a variety of term life insurance policies and a quick, no-hassle application process.

Which term life insurance policy is right for you?
There are several factors that can affect how much life insurance coverage you need, and how long you need it for. The two variables to adjust based on your unique situation are coverage amount and term length.
Coverage amount

There are a few ways to think about your term life insurance coverage amount. A simple way to calculate this is by multiplying your annual salary by 10. Or, you can use the tools below to get a more detailed estimate. Alternatively, you can use the DIME method to add up what you need.

Total coverage = Debt + Income + Mortgage + Education costs

If you want help getting a more detailed recommendation, try our Coverage Calculator.

Term length

Determining the right term length can depend on several factors. Consider a term that would cover your family for the number of years they would depend on you, financially or otherwise. You may want a term that lasts until:

  • You retire
  • Your children are grown and are no longer dependents
  • Your mortgage is paid off
  • You reach your savings goals
Term life insurance example: Mike

Take Mike. He’s a 35-year-old man who makes $75,000 per year. He has a 2-year-old child, and another on the way. Mike and his wife recently bought a house and have signed a 30-year mortgage. He regularly contributes to his retirement fund and plans to have enough saved for himself and his wife to retire at the age of 65.

Financial experts often recommend multiplying your annual salary by 10 to get a general idea of your term insurance coverage needs. Because $75,000 x 10 = $750,000, Mike should consider getting $750,000 in coverage.

When it comes to term length, Mike needs to think about his mortgage, when his children will become financially independent, and retirement savings. Because he will owe payments on his mortgage for 30 years, a 30-year term will provide protection during this period of time. Within 30 years, he also expects his two children to be financially independent and to have enough retirement savings set aside. For all these reasons, a 30-year term life policy seems to suit Mike’s coverage needs best.

And there we have it. Mike will apply for $750,000 in coverage for a 30-year term. With this life insurance policy, Mike can feel confident that his family will be covered by the appropriate death benefit if anything were to happen to him. You can use our Coverage Calculator to help estimate your specific needs and find an insurance policy that works for you.

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