Is Life Insurance Worth It?

Here's the simple way to figure out if life insurance is worth it for you: 

Yes, life insurance is worth it if:

• Someone relies on your income for housing, food or bills.  Dependents can be children, but could be a spouse, partner, or someone else.
• You have debt like a mortgage, car loans or credit cards
• You're the primary income earner in your household
• You support aging parents or have young children

No, life insurance is not worth it if:

• You have no spouse, kids or financial dependents
• You've accumulated enough wealth to support your family without insurance
• Your budget can't handle monthly premiums
• You're elderly with no remaining financial obligations

A scenario where life insurance was worth it: A 35-year-old father with a $300,000 mortgage and two kids bought a $500,000, 20-year term policy for $45 monthly. He died in a car accident at 42. His family received the full death benefit which was enough to pay off the mortgage ($180,000 remaining), cover 10 years of living expenses, and fund college savings. Total life insurance premiums paid were $3,780 with a payout of $500,000. That's 132 times the cost.

Life insurance coverage makes more sense at certain ages and stages of life than others Here's when you'll get the most value from life insurance:

Life insurance costs less than most people think, and the protection far exceeds what you pay. A healthy 30-year-old pays roughly $30 monthly for $500,000 in 20-year term coverage. Over 20 years, that's $7,200 in premiums. Your family gets $500,000 if you die and that's 69 times what you paid.

Even if you pay premiums for 30 years ($10,800 total) and never use the policy, your family had $500,000 in protection the entire time. Compare that to the financial impact of losing your income with no safety net.

Only 51% of Americans have life insurance, according to LIMRA's 2025 research. Why? Most people overestimate the cost or prioritize other expenses first. Weighing the pros and cons helps you decide if coverage fits your budget.

Life insurance comes in many types, but the two main categories are term and permanent. Term life insurance is straightforward and provides a death benefit, but provides no cash value. Permanent life insurance, like whole life, offers a death benefit and functions as an investment tool.

95% of families should buy term coverage. It's affordable and covers the 20 to 30 years when your family faces the most financial risk. Put the savings from cheaper premiums toward retirement accounts or emergency funds. You'll build more wealth than permanent insurance provides.

Term policies last 10, 20 or 30 years and cost significantly less than permanent coverage. A healthy 35 year old pays $45 monthly for $500,000 in 20 year term coverage. 

Buy term if you: Have a mortgage, young kids, or temporary financial obligations that'll disappear in 20 to 30 years. Most families need term coverage.

Skip term if you: Need lifetime coverage for estate planning or have a permanently disabled dependent requiring care after you die.

Whole life and universal life policies never expire as long as you pay premiums. They cost 5 to 10 times more than term. Expect $400 to $600 monthly for $500,000 in coverage. These policies build cash value you can borrow against. Think of it as a savings or investment account attached to insurance, though returns are 2% to 4% annually which is lower than stock market returns.

Buy permanent if you: Have maxed out retirement accounts, need estate planning tools, or want to leave a guaranteed inheritance. You also need a high income to afford premiums.

Skip permanent if you: Have a tight budget, haven't maxed out your 401(k), or just need coverage while raising kids. The high cost rarely justifies the benefits for most families.

Get life insurance if people depend on your paycheck or you carry significant debt. Young families, homeowners with mortgages and primary breadwinners get the most value. The death benefit replaces lost income, pays off obligations and covers living expenses for years.

You don't need coverage if you're financially independent with no dependents. Already accumulated enough wealth to support your family? Put that premium money toward investments or retirement instead.

Buy term coverage in your 30s or 40s when premiums are affordable and your family faces maximum financial risk. Skip permanent insurance unless you've maxed out retirement accounts and need estate planning tools.

Life insurance raises a lot of questions. Here are answers to the most common ones.