How life insurance works
You pay a premium to the insurer; if you die while the policy is in force, the insurer pays a tax-free death benefit to your beneficiaries. That payout covers final expenses, outstanding debts, mortgages, income replacement, and education so your family isn’t forced into financial triage during grief.
The main types of life insurance
- Term life Fixed-duration coverage (10, 20, 30 years). Lower cost. No cash value. Ideal for covering a mortgage or kids-at-home years.
- Whole life Lifelong coverage with a guaranteed death benefit and a cash-value savings component. Higher premium. Useful for estate planning.
- Universal life Flexible premium and death benefit. Cash value grows based on interest rates. Can be structured for long-term estate and legacy planning.
How much coverage do you need?
Start with: outstanding debts + mortgage + (annual income × years of support) + education costs + final expenses. Stay-at-home parents need coverage too the replacement cost of childcare, transportation, and household management runs $60k–$100k/year in San Diego County.