Updated: July 10, 2025
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Life insurance offers financial security for your loved ones, but weigh the pros and cons based on your personal circumstances before choosing a policy.
Alternatives such as investments or self-funding can offer comparable benefits without the commitment that comes with life insurance.
Term and permanent life insurance policies offer different benefits, and the policy's value depends on which type you choose.
If you have financial dependents or long-term obligations, life insurance can be a smart investment. It offers essential financial protection by covering expenses like debts, funeral costs, and lost income. If you’ve already met your major financial responsibilities and your loved ones are financially secure without you, a policy may not be necessary.
To decide if it’s right for you, weigh the cost of premiums against the benefits, and evaluate which type of policy best aligns with your goals.
Life insurance provides a financial safety net for your loved ones. It can replace income, cover debts and funeral costs, and support long-term needs like education and estate planning.
Whether life insurance is worth it depends on your financial responsibilities, who depends on you, and your long-term goals. These examples can help clarify if a policy is a smart move for your situation.
Life insurance is a smart choice for individuals experiencing major life events or taking on long-term responsibilities. You should consider buying a policy if you’re getting married, starting a family, supporting loved ones financially, taking on debt like a mortgage or planning for the future. In these situations, life insurance can provide financial protection for those who depend on you.
When starting married life, plan for the future and ensure you're both protected. If your spouse relies on your income, a life insurance policy can help provide for your spouse if you pass away.
Buy life insurance when you become a parent or take on a dependent. It can help support your children financially if you pass away while they’re young.
Consider purchasing life insurance if you have a significant financial obligation like a mortgage. A life insurance policy can help your family cover mortgage payments and other major expenses.
Life insurance is a smart choice if you're the primary breadwinner or support family members like parents or siblings. A life insurance policy can help replace lost income if you pass away.
Life insurance premiums can strain your budget if you're in certain situations where the coverage isn't actually necessary. While having life insurance can be reassuring, it may not be worth the cost if you're in any of these situations:
You might want to forgo life insurance if you don’t have a spouse or children. Life insurance is primarily a benefit for others, not yourself, so it may not be worth the cost if there’s no clear beneficiary.
If you have a low income and are on a tight budget, life insurance may not be the best use of your funds.
Another reason to buy life insurance is to support family members, like parents or siblings, if you pass away. If you're financially responsible only for yourself, you may not need a life insurance policy.
The older you are, the more expensive your life insurance policy becomes. If you’re a senior considering a life insurance policy, carefully weigh whether or not the benefits are worth the cost.
While there's nothing wrong with purchasing a life insurance policy, even if you don’t strictly need it, you may get more value from putting those funds toward other priorities, like contributing to a retirement plan or building your emergency fund.
Life insurance is not used for immediate personal benefits or short-term financial gains. It's meant to provide financial security for beneficiaries after your death and doesn't offer direct financial advantages during your lifetime, unlike accessible investment accounts or savings plans.
Life insurance is often part of a solid financial plan, but LIMRA's 2024 research shows that only 51% of Americans have coverage. Many also overestimate the cost of term life insurance, with 72% guessing it's more expensive than it is. Over half say their estimates are based on gut instinct or a random guess.
Understanding the advantages and disadvantages of life insurance can help you make an informed decision and assess whether the benefits of life insurance align with your financial goals and personal circumstances.
The benefits of life insurance extend beyond simple financial support after one's passing:
Life insurance ensures that your family can maintain their standard of living in your absence. The death benefit can cover mortgage payments, utility bills and your children's education.
If you're the primary breadwinner, the death benefit can replace your income, providing for your family's financial needs.
Permanent life insurance policies offer a cash value component that grows tax-deferred, allowing you to accumulate wealth over time.
Some permanent life insurance policies allow you to take loans against the cash value, offering a low-interest borrowing option.
The drawbacks of life insurance highlight the challenges and limitations that policyholders might face:
Life insurance premiums can be a notable expense, especially for permanent policies and those who are older or have health issues.
Many insurers require a medical exam, and pre-existing conditions can raise your premiums or disqualify you from coverage altogether.
Term life insurance offers coverage for a limited period, and if you outlive that term, the policy expires without any benefit payout.
With its cash value component and investment options, permanent life insurance may require careful management to ensure it meets your financial goals.
Life insurance is a financial agreement between you and an insurance company. You pay premiums regularly. In return, the insurer provides a predetermined death benefit to your beneficiaries when you die. This benefit can help settle debts, replace lost income and provide financial protection for your loved ones.
Understanding how life insurance works can help you determine its value in your financial plan.
Multiple factors determine the cost of life insurance. Understanding these can help you choose a policy that fits your needs and budget.
We gathered quotes from major insurers for healthy, nonsmoking adults to create the table below, showing average term life insurance costs by age for a $250,000 term life insurance policy.
| 30 | $14 | $12 |
| 40 | $18 | $16 |
| 50 | $37 | $31 |
| 60 | $76 | $54 |
| 70 | $204 | $155 |
We’ll give you a suggested amount of cover to buy in just 3 easy steps. — it's free, no personal information required, no spam.
Rates updated:
Jul 11, 2025
Deciding whether life insurance is worth it and what type of policy to get involves carefully considering various factors. These are key to understanding the importance of life insurance and its role in securing your family's financial future.
Your age impacts your premiums. Younger policyholders often secure lower premiums.
A medical exam is usually part of the application process. Pre-existing conditions or poor health can result in higher premiums or even disqualification.
Consider your debts, mortgages or any other financial responsibilities. A benefit of having life insurance is that it provides funds to cover these costs, ensuring your debt doesn't burden your family.
If your family depends on your income, life insurance becomes more important. It can replace your income if you pass away.
If you're considering using life insurance as an investment, it can affect the type of policy you choose. Permanent policies, for example, include a cash value component that can be an investment tool.
Life insurance comes in various types, but the two main categories are term and permanent. Each serves distinct needs and offers unique features and limitations.
Term life insurance is straightforward but offers no cash value, while permanent life insurance can provide a death benefit and be an investment tool.
Term life insurance is a good choice for those with dependents who want to financially protect their loved ones for a set period. This insurance type tends to be more affordable than whole life insurance. However, you’ll need to purchase a new policy once your term length is up if you want to continue coverage.
Best for:
Not for:
Term life insurance is straightforward and affordable, making it an excellent option for most people. It provides coverage for the length of the policy, so you’ll be covered if you die at any time during the term. Once your term has ended, you can purchase a new policy.
Sometimes, insurers allow converting a term life insurance policy to a permanent policy if needed.
Permanent life insurance, which includes whole life and universal life insurance, provides coverage for your entire lifetime as long as you continue to pay premiums. Unlike term life, permanent life insurance policies have a cash value component, which can be an additional savings vehicle.
Best for:
Not for:
While permanent life insurance may include an investment component, the primary purpose is life coverage, not investment. The returns should not be the main reason for purchasing these policies.
When considering life insurance with an investment component, such as whole or universal life policies, assess both the life insurance advantages and disadvantages. These policies provide a death benefit and build cash value over time, appealing to those seeking long-term financial planning. However, be mindful of the higher premiums compared to term life insurance and ensure the investment benefits align with your financial goals.
While permanent life insurance may include an investment component, the primary purpose is life coverage, not investment. The returns should not be the main reason for purchasing these policies.
Life insurance isn't the only way to secure your family's future. Alternative strategies are worth exploring based on your needs and financial goals. Each option has risks and benefits. Consult financial advisors to tailor a strategy that suits your circumstances.
Life Insurance Alternative | Description |
|---|---|
Life Insurance vs. Investing | Investing in the stock market or mutual funds may yield higher returns over time. While riskier, these options offer capital growth opportunities, which can be a financial cushion for your family. |
Health Insurance | Certain health insurance policies come with living benefits that provide financial assistance in case of chronic or terminal illnesses. Health insurance can complement or replace life insurance. |
Self-Funding | Building a robust savings account or emergency fund can sometimes make life insurance unnecessary. But, this requires disciplined saving and a substantial income to accumulate enough funds to support your family. |
Real Estate | Property investment can provide a steady income stream through rentals. Its value can also increase, offering long-term financial security. |
Annuities | Annuities are financial products that provide a steady income stream, usually after retirement. They can be a part of your financial planning to ensure that your spouse or dependents have a consistent income in your absence. |
When evaluating life insurance vs. investing, understand that life insurance offers advantages not typically found in direct investments. Life insurance provides tax benefits and guarantees financial support for dependents, which investments may lack.
This difference between life insurance and investment highlights life insurance as a versatile financial tool that provides long-term security. Understanding these differences will help you decide whether to include life insurance in your financial strategy, whether for estate planning or protecting your family's future.
Life insurance is worth it if someone depends on your income, whether a spouse, child or aging parent. According to industry experts, the right policy ensures your loved ones can cover debts, daily expenses and long-term needs like education or housing in your absence.
For young, healthy individuals, term life offers affordable financial protection. If you’re financially independent with no dependents, life insurance may not be necessary. Evaluate your personal situation and goals before deciding, and consult a financial advisor for tailored recommendations.
Deciding if life insurance is worth it involves many factors. To help you, we answered common questions about life insurance.
Whether or not life insurance is worth it varies on a case-by-case basis. Generally, it’s worth considering if you have people in your life who depend on you financially.
Term life insurance offers straightforward coverage for a specified period, making it a cost-effective choice for many. It can be valuable if you have short-term financial obligations, such as a mortgage or children's education expenses, and want to protect your family during that time. Weigh your financial needs against the premiums, considering your age, health and overall financial situation.
Permanent life insurance provides long-term security and additional financial benefits. Unlike term insurance, permanent policies provide lifelong coverage and a cash value component that grows over time. This cash value can be borrowed against or used to pay premiums, offering a flexible financial tool in addition to the death benefit. For those planning for the long term and interested in building wealth, permanent life insurance can be a worthwhile investment.
Universal life insurance may be worth it for people seeking flexibility in adjusting premiums and benefits. It suits those who need adaptable financial planning tools that can adjust to changing life circumstances.
Life insurance provides financial security for those with dependents or significant debts. It ensures that expenses like mortgages, education and daily expenses are covered if the policyholder passes away. This safety net helps protect loved ones from financial hardship, making it a key part of any financial plan for those responsible for others' well-being.
A key reason to buy life insurance is to secure your family's financial future, ensuring that financial obligations are met even after you're gone.
The decision to get life insurance depends on your financial situation and responsibilities. If you have dependents or financial obligations, like a mortgage, debts or family members relying on your income, life insurance can protect their financial well-being if you pass away. Consider your age, health and financial goals when making this decision.
Life insurance is primarily a financial protection tool, not a traditional investment. Its primary purpose is to provide a death benefit to your beneficiaries, ensuring their financial security. While some policies, like whole life or universal life, build cash value over time, they have higher premiums and fees than other investment options. Life insurance isn't typically a high-return investment.
Securing life insurance at 30 can be a prudent choice, particularly if you're starting a family or have significant debts. Early enrollment can result in more favorable premiums, reflecting key reasons to buy life insurance at a younger age.
Having life insurance after 50 can be worth it, especially for managing potential estate taxes, covering final expenses and providing for any dependents. It offers financial security for your beneficiaries, which is a good reason to have life insurance later in life.
If you have no dependents, consider life insurance if you have substantial debts or wish to leave a financial gift to a charity or some relatives. It can also cover personal end-of-life expenses, preventing any financial burden on others.
Determining the right coverage amount involves evaluating your current financial obligations, the potential future needs of your dependents and your income. A policy worth 10 to 12 times your annual salary is recommended for adequate coverage. For example, if you earn $50,000 annually, consider $500,000 to $600,000 in coverage. This calculation ensures your family can maintain their lifestyle and cover major expenses like your mortgage and children's education.
The duration of life insurance depends on the type of policy. Term life insurance covers a set period, such as 10, 20 or 30 years, while permanent life insurance offers lifelong coverage, demonstrating the long-term benefits of life insurance.
If you already have a life insurance policy, you may decide that you no longer need your policy if you are young and have no dependents. Similarly, you may no longer need life insurance if you’ve accumulated enough savings and assets to care for your loved ones after your passing.
Yes, if losing one income would create financial hardship. Even dual-income households often need both paychecks to maintain their lifestyle and meet financial goals.
Yes, your spouse relies entirely on your income, making life insurance essential to replace those earnings if you die.
It depends. You may not need coverage if your spouse can maintain their lifestyle on retirement income and savings alone. Some retirees keep policies for estate planning purposes.
Deciding whether life insurance is worth the cost requires understanding both what you'll pay and what protection you'll actually receive. We analyzed 1,488 life insurance quotes alongside customer satisfaction scores, financial stability reports and product offerings to determine which companies offer the best value for your premium dollars.
Our scoring system evaluates companies across five categories that directly impact your experience as a policyholder, from initial quote to potential claim payout. We chose these specific insurers based on their national coverage and ability to provide online quotes, reflecting how most people actually shop for life insurance today.
How We Scored Companies
Each company can earn up to five points in five categories. We then calculate an overall MoneyGeek score out of 100 using these weightings:
What We Analyzed
Our Sample Customer Profile
We used this standard profile to gather comparable quotes:
All premiums reflect this profile unless noted otherwise. We also collected quotes across different ages, health ratings, coverage amounts and term lengths to identify pricing patterns and determine the best value for various customer types.
This approach lets you see not just which companies offer the lowest rates, but which provide the best overall value when you factor in reliability, service quality and product options.
About Margaret Wack
Margaret Wack, a contributing journalist at MoneyGeek, is an award-winning poet with over six years of editorial experience in digital publications. She writes about insurance, saving, investing and banking, with bylines on Money Under 30 and Bankrate.
Wack earned her Bachelor of Arts in Classics, Comparative Literature and Poetry from Smith College and her Master of Arts from St. John's College.
