How Much Life Insurance Do You Need? Term vs. Whole Life and Needs Analysis

Life insurance is about one question: if you died tomorrow, would someone you care about be left in a financial hole? In this lecture, I explain who needs coverage, how much, and which kind of policy makes sense. Here’s an example from the video: a young family wants to replace $100,000 of income for 20 years. The popular DIME shortcut simply multiplies, $100,000 × 20 = $2 million. But the death benefit earns a return while it’s paid out, so the amount actually needed is about $1.54 million. Run the numbers instead of guessing and you avoid paying for coverage you don’t need, or worse, buying too little. Cost matters too. A healthy 30-year-old man can buy $500,000 of term coverage for about $215 a year. A 25-year-old buying $100,000 of whole life pays $1,057 a year, and after 20 years the cash value is still less than the premiums paid in. What’s covered: How insurance works: risk pooling and the law of large numbers Five ways to handle risk: avoid, assume, prevent, control, transfer Underwriting and what raises your premium Who needs life insurance across the life cycle Five ways to estimate your need: earnings multiple, DIME, needs analysis, present value, and human life value Social Security survivor benefits Present value of income replacement, with BA II Plus keystrokes (END and BGN) Term life: level, decreasing, renewable, and convertible What term coverage costs by age Whole life, universal life, and variable life Term vs. cash value: which fits your needs Choosing a company: ratings and state guaranty associations Buying online or through an agent, and captive vs. independent agents Beneficiaries, grace periods, policy loans, and the incontestability clause Settlement options and riders Preview of the Carter family case and free online calculators About me: I’m Tom Robinson, Ph.D., CPA, CFA, CFP®, CAIA, Faculty Director of the Financial Planning and Wealth Management program at George Mason University’s Costello College of Business. This video is for educational purposes only and is not financial, tax, insurance, or investment advice. Rates shown change often; get current quotes before you buy. Subscribe for more on financial planning and wealth management:    / @proftomfinplan   #LifeInsurance #TermLife #FinancialPlanning #PersonalFinance #CFP