Assess Insurance Need
1-2 hoursDetermine whether you need life insurance and calculate coverage amount based on income replacement, debts, and future obligations.
Intermediate1-2 weeks
Life Insurance Planning Guide
Life insurance planning guide for choosing term vs whole life, calculating coverage needs, beneficiary designations, and policy review timelines for families.
parentsmarried couplesprimary income earnersbusiness owners
Workflow
Choose Policy Type
2-4 hoursCompare term life (affordable, temporary) vs whole/universal life (permanent, cash value) based on your needs and budget.
Calculate Coverage Amount
1-2 hoursUse the DIME method (Debt, Income, Mortgage, Education) to calculate precise coverage needs.
Shop and Compare Quotes
2-3 daysGet quotes from multiple carriers for identical term length and coverage amount — rates vary 30-50% for same coverage.
Review and Update Beneficiaries
1 hourDesignate primary and contingent beneficiaries, review coverage after major life events, and avoid lapsing policies.
Tools Used
- Life Insurance Needs WorksheetPrimaryReference
Determine if life insurance is needed and estimate coverage amount. · Compare term vs whole life costs over policy lifetime. · Calculate precise coverage using DIME method inputs. · Compare quotes across carriers for target coverage. · Reassess coverage needs at life milestones.
- Budget CalculatorSupporting
Ensure premium fits within monthly budget.
- Investment Return CalculatorSupporting
Compare whole life cash value growth vs term + invested difference.
- Debt Payoff CalculatorSupporting
Include outstanding debts in coverage calculation.
- College Savings CalculatorSupporting
Factor education funding needs for dependents.
Checklist
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Assessment
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Maintenance
Reference Materials
Term vs Permanent Life InsuranceTable
Comparison of major life insurance types for US buyers.
| Feature | Term Life | Whole Life | Universal Life |
|---|---|---|---|
| Duration | 10-30 years | Lifetime | Lifetime (flexible) |
| Premium | $25-$50/mo ($500K) | $400-$600/mo | $200-$400/mo |
| Cash value | None | Yes (guaranteed) | Yes (variable) |
| Best for | Most families | Estate planning | Complex needs |
DIME Coverage CalculationFormula
Coverage = Debt + (Income × years needed) + Mortgage balance + Education costs for all children.
Buy Term, Invest the Rest
A 30-year $500K term policy costs ~$30/month for a healthy 30-year-old. Whole life for the same coverage costs $400+/month — invest the $370 difference in index funds instead.
Do Not Lapse During Health Changes
If diagnosed with a serious condition, keep existing coverage — new policies will be unaffordable or denied. Convert term to permanent before expiry if health declines.
Employer Coverage Is Not Enough
Employer-provided life insurance (1-2x salary) is rarely sufficient and disappears if you leave the job. Supplement with personal term policy.
Ladder Term Policies
Buy multiple term policies with staggered expiry (10, 20, 30 year) to match declining needs as children grow and mortgage pays down.
Safety Notes
- Never cancel existing life insurance before new coverage is approved and in force — a gap in coverage during health changes can be catastrophic.
- Be wary of agents pushing whole life commissions — if an agent recommends permanent insurance before assessing your needs, seek a second opinion.