Real Example: Cost Over Time

A healthy 30-year-old buys a 20-year term policy for $500,000 at $35/month. Total cost over 20 years: $8,400. If they die in year 1, their family gets $500,000. If they die in year 20, their family gets $500,000. If they survive (most likely), they paid $8,400 for peace of mind. Compare this to a single major car accident, unplanned medical event, or job loss—the $8,400 pales against actual financial disasters.

Comparing to Alternatives

To replace a $500,000 death benefit without insurance, you’d need $500,000 in savings. For a typical family building wealth gradually, accumulating half a million dollars takes decades. During that time, they’re unprotected. Term life provides that protection immediately while you’re saving. It’s not either/or—it’s both. You buy term life AND invest for retirement.

You’re Supporting a Family

If you have a spouse, children, or relatives who depend on your income, term life is absolutely worth it. Their financial survival shouldn’t depend on luck. A $500,000 policy for $300-500 annually is one of the best financial decisions you can make.

You Have a Mortgage

A $300,000 mortgage is manageable with two incomes. On one income after someone dies? Potentially impossible. Term life can pay off the mortgage entirely, ensuring your family keeps the house and has stability instead of facing foreclosure during a crisis.

You’re Young and Healthy

This is a peak opportunity. Rates at 25 are 50-70% lower than at 45. A $500,000 policy costs $15-20/month at 25 but $40-60/month at 45. Buying now locks in low rates for decades. Even if you don’t have dependents yet, future-proofing against health changes makes sense.

You Have Student Loans

If you die with outstanding student loans and a spouse, they may inherit the debt. Federal loans may be forgiven, but private loans could be their problem. Term life can eliminate this uncertainty, paying off your debt so your family doesn’t inherit financial obligation.

You’re Building Wealth

Most people don’t have $500,000 in savings. During the accumulation phase of your career (ages 25-50), term life protects against premature death when you’re most vulnerable. Once you’ve accumulated substantial wealth, coverage needs may decrease.

You Want Peace of Mind

Beyond finances, knowing your family is protected eliminates a significant source of anxiety. That peace of mind—the ability to focus on work and life without financial worry—has real psychological value worth the modest premium.

✗ You’re Single with No Dependents

If no one depends on your income for survival, term life primarily covers funeral costs. While $10,000-15,000 for final expenses is real, a $500,000 policy is overkill. However, even here, a modest $100,000-150,000 policy remains cheap and future-proofs you.

✗ You Have Substantial Savings

If you have $500,000+ in investments and your family is financially independent, insurance is unnecessary. Your savings already provide the coverage insurance would offer. Similarly, a retiree with $2 million in assets doesn’t need term life to protect against income loss.

✗ You Have No Debt

If you own your home free and clear, have no mortgage or car loans, and no other obligations, term life’s debt protection value disappears. You may still want it for income replacement if you have dependents, but the debt elimination component doesn’t apply.

✗ Your Family is Financially Independent

If your spouse earns substantial income and your children are grown, term life provides minimal value. Your family wouldn’t face hardship without your income. In this case, only final expense coverage ($10,000-50,000) might make sense.

✗ Your Employer Provides Sufficient Coverage

If your employer offers $1 million in life insurance and that fully covers your needs, individual term life is redundant. However, verify that coverage extends post-employment—most don’t, making individual policies valuable even when employer coverage exists.

✗ You’re Retired with Adequate Savings

If you’re retired with pension income and substantial savings, term life doesn’t protect income because you’re not working. Only final expense coverage might be relevant, and that’s better handled through minimal coverage or savings.

Value #1: Maintained Stability

With $500,000, a surviving spouse doesn’t have to immediately uproot kids, sell the family home, or work three jobs. Stability during grief is invaluable. Kids stay in their school. The family keeps the house. The surviving parent has time to process the loss before making major decisions.

Value #2: Eliminated Pressure

Without insurance, grief combines with financial panic. The surviving spouse can’t take time off work to process the loss or handle estate issues—they must work immediately. Insurance eliminates that pressure, allowing grieving at a healthy pace rather than under duress.

Value #3: Continued Opportunity

A surviving parent with $500,000 can keep kids in private school, pay for college, or let a teenager graduate before requiring them to work. Without insurance, that teenager might need to work immediately. Insurance preserves opportunities that death would otherwise eliminate.

Value #4: Dignity and Control

With financial security, a widow can make decisions from stability, not panic. She can hire help instead of managing everything alone. She can take time off work for children’s events. She controls her fate rather than being controlled by circumstances.

❌ “I’m Statistically Unlikely to Die”

True—you probably won’t die during the term. That’s exactly why insurance is affordable. But insurance isn’t about probability; it’s about catastrophic risk. You’re statistically unlikely to have a house fire, but you carry homeowners’ insurance. Life insurance operates the same way—low probability, high impact.

❌ “I Can Just Save the Premium Instead”

You can—and should! But it takes decades to save $500,000. In the meantime, you’re unprotected. Term life protects you immediately while you save. Additionally, most people won’t maintain that savings discipline consistently. Insurance is automatic; self-insurance requires willpower.

❌ “It’s a Waste if I Don’t Die”

That’s the goal. Not dying is success, not failure. You don’t lament “wasting” car insurance by never having an accident. You’re grateful you didn’t need it. Term life should work the same way—success means you outlive the policy.

❌ “My Employer Coverage Should Be Enough”

Most employers provide 1-3x salary—rarely the recommended 8-12x. Also, that coverage ends when you leave the job or lose employment. An individual policy stays with you regardless. Even with employer coverage, supplemental individual insurance is usually wise.

❌ “I Can Always Get It Later”

You can—at much higher cost and possibly with health restrictions. A health diagnosis at 35 (diabetes, high blood pressure, anxiety) makes insurance expensive or unavailable. Buying at 25 while healthy locks in rates for life. This is the strongest reason to buy term life early.

❌ “Life Insurance is Too Expensive”

$30-40/month for a healthy young adult is less than most streaming services combined. It’s less than eating lunch out a few times weekly. For the financial protection provided, it’s remarkably affordable. If the budget is tight, even a $200,000-250,000 policy is better than nothing and costs $10-15/month.

Is term life worth it if I’m single?

Direct answer: It depends. If you have no dependents, a modest policy ($100,000-150,000) for final expenses is worth it. Full coverage ($500,000+) probably isn’t.

However, even single adults benefit from locking in rates while young and healthy. If you anticipate marriage or children in the next few years, buying now at low rates is smart. The cost is minimal ($10-15/month) and the future protection is substantial.

What’s the actual ROI on term life insurance?

Direct answer: The ROI is undefined because it’s not an investment—it’s insurance. You get ROI only if you die, which is the scenario you’re insuring against.

Think of it like car insurance. You don’t expect ROI on a policy you never claim—you’re paying for protection against catastrophe. If you die, your beneficiary gets 50-100x what you paid in premiums. If you don’t die (the goal), you paid for peace of mind. That’s the real value.

Should I buy term life if I already have employer coverage?

Direct answer: Usually yes. Employer coverage is usually insufficient (1-3x salary) and disappears when you leave the job.

If your employer provides $500,000 (rare), it might be adequate. But if they provide $100,000-200,000 (typical), you need supplemental coverage. Even better: if you can port the employer coverage, individual policies are still recommended because portability isn’t guaranteed.

How do I know if I bought too much or too little coverage?

Direct answer: Calculate by adding your debts, 5-10 years of expenses, and final costs. That’s your target. Buying 20-30% more provides a buffer; buying 50%+ more is overkill.

A 35-year-old with a $200,000 mortgage, $30,000 debt, and $50,000 annual expenses might need $400,000-500,000. Buying $750,000 provides a buffer but wastes premium. Buying $200,000 leaves gaps. Most people fall in the $300,000-$750,000 range.

Is term life worth it if I have health problems?

Direct answer: Yes, and actually more important. With health issues, insurance becomes harder to get and more expensive to obtain later.

Many people with diabetes, high blood pressure, or depression can get approved for term life—rates are higher, but coverage is available. Waiting until health worsens makes insurance impossible or prohibitively expensive. If you have health challenges, getting coverage now (while still approvable) is worth it.

When is term life NOT worth getting?

Direct answer: When you have substantial savings, no dependents, minimal debt, and financially independent family members.

A retired person with $2 million in assets doesn’t need term life. A 28-year-old single professional with $500,000 saved probably doesn’t need it either. However, even in these cases, a modest policy ($100,000-150,000) for final expenses might still make sense and costs very little.