The basics, one question at a time

What is life insurance?

An agreement with an insurer: you make a regular payment, and if you die while the policy is in place, it pays the people you chose a lump sum. Most people buy it so their family could keep the home and everyday life going without their income.

Who needs it?

Anyone whose family would struggle without their income, or without the care they give at home. That often means parents of young children, people with a mortgage, or someone whose partner relies on them. If no one depends on you for money, you may need little or none.

What's a premium?

The insurance word for what you pay to keep a policy, usually each month. On a term policy it stays the same for the whole term. If you stop paying, the coverage ends after a short window to catch up.

Words to know:PremiumPremiumThe insurance word for what you pay to keep a policy, usually each month. On a term policy it stays the same for the whole term. If you stop paying, the coverage ends after a short window to catch up.TermTermHow many years the policy lasts. If nothing happens in that time, it simply ends and you stop paying. Most people pick a term that covers the years their family relies on their income.

What's the face amount?

The amount written on the policy that it would pay out. It's the same thing this planner calls coverage.

Words to know:Face amountFace amountThe amount written on the policy that it would pay out. It's the same thing this planner calls coverage.CoverageCoverageThe amount the policy would pay your family, in one lump sum, if something happened to you. They usually don't pay income tax on it.

Who gets the money?

The person or people you name on the policy to receive the money. You can name more than one, split it between them, and change them later. It's worth checking them after a marriage, a divorce or a new baby.

Words to know:BeneficiaryBeneficiaryThe person or people you name on the policy to receive the money. You can name more than one, split it between them, and change them later.

How much do I need?

Add up what your family would need: some years of your income, the mortgage and other debts, college if you want to include it, and final costs. Then take off what's already in place, like a work policy and savings. The planner does this with your own numbers and shows every line.

Words to know:Years of supportYears of supportHow many years of your income the plan would replace, so your family could keep living the way they do now. With kids, it usually runs until the youngest is grown.Already in placeAlready in placeCoverage and savings your family could already count on today, such as a policy through work. We take it off the total, so you only consider what's missing.

Why a range and not one exact number?

Nobody can know exactly what a family would need, so the planner shows a sensible low and high around its estimate. Any amount in the range is a reasonable choice, and the decision is yours.

Words to know:The rangeThe rangeA sensible low and high for your situation: three years of support less or more, and never less than half the estimate. The exact amount is your call, and anywhere in the range is a reasonable choice.

Is my work policy enough?

Life insurance your employer provides, often one or two times your salary. It usually ends if you leave or lose the job, so many people don't count on it alone.

Words to know:Coverage through workCoverage through workLife insurance your employer provides, often one or two times your salary. It usually ends if you leave or lose the job, so many people don't count on it alone.

Term or permanent life?

Term life covers a set number of years and costs less. Permanent life lasts for life and builds cash value, at a much higher price. Many families use term to cover the years when children and a mortgage depend on their income.

Words to know:TermTermHow many years the policy lasts. If nothing happens in that time, it simply ends and you stop paying. Most people pick a term that covers the years their family relies on their income.Permanent lifePermanent lifeA policy that lasts for the rest of your life, as long as you keep paying. It costs much more than term, and part of what you pay builds up as cash value you can use later. Whole life and universal life are both kinds of permanent life insurance.

What's cash value?

Money that builds up inside a permanent policy over the years. You can borrow against it, or take it if you ever cancel the policy. Term policies don't have it.

Words to know:Cash valueCash valueMoney that builds up inside a permanent policy over the years. You can borrow against it, or take it if you ever cancel the policy. Term policies don't have it.

What happens at the end of a term?

The policy simply ends and you stop paying. Nothing is paid out, and you don't owe anything. Some policies let you keep going year by year at a much higher price, and many let you switch to a permanent policy before a deadline, which is called converting.

Words to know:ConvertingConvertingSwitching a term policy to a permanent one without starting over. Many term policies allow it before a deadline, often without a new medical exam. The new policy costs more, priced for your age when you switch.Lincoln level termLincoln level termLincoln Financial's term policies lock in the price for 10, 15, 20 or 30 years. Before the term ends, and before age 70, you can switch to a Lincoln permanent policy, often without a new medical exam. We show the closest match; a Lincoln advisor confirms which one you qualify for.

What are riders?

An optional extra added to a policy, sometimes included and sometimes for a small added cost. A common one lets you use part of the coverage early if you become terminally ill. Each insurer offers different ones.

Words to know:RiderRiderAn optional extra added to a policy, sometimes included and sometimes for a small added cost. A common one lets you use part of the coverage early if you become terminally ill. Each insurer offers different ones.

Is permanent life the same as whole life?

Lincoln's permanent policies are universal life, not whole life. They also last for life and build cash value, but the payments and growth can be more flexible. We price permanent coverage as a traditional level-payment policy, so a Lincoln advisor's real figures will differ.

Words to know:Lincoln permanent lifeLincoln permanent lifeLincoln's permanent policies are universal life, not whole life. They also last for life and build cash value, but the payments and growth can be more flexible. We price permanent coverage as a traditional level-payment policy, so a Lincoln advisor's real figures will differ.

What does a health review involve?

The insurer's check of your health and habits before it sets your price. It usually means health questions, and sometimes a short exam by a nurse who comes to you, or a look at your medical records. The result is your health class.

Words to know:UnderwritingUnderwritingThe insurer's check of your health and habits before it sets your price. It usually means health questions, and sometimes a short exam by a nurse who comes to you, or a look at your medical records. The result is your health class.Health classHealth classThe group an insurer puts you in, based on your health, when it sets your price. Preferred Plus is the lowest price and Standard is typical, while a "Table" group pays more because of a health condition. The insurer decides after its health review.

Does using the planner sign me up for anything?

No. The planner works out an estimate and explains it, and it doesn't apply for a policy. Your answers only reach a Lincoln Financial advisor if you ask one to get in touch. The prices it shows are estimates, and an insurer sets the final price after its health review.