New to all this? You’re in the right place. These life insurance basics take about five minutes to read. Start at the top, or jump to figuring out your coverage amount.
What Is Life Insurance?
Life insurance is a contract between you and an insurance company. You pay a regular amount, called a premium. In return, the company agrees to pay a set sum of money, called the death benefit, to the people you choose when you pass away.
It’s there for the people who count on you: a spouse or partner, your kids, a parent you help out, or someone who shares a home loan with you. Even if no one depends on your paycheck, some people get a small policy to cover end-of-life expenses.
The death benefit is usually paid in one lump sum, and it’s generally free of federal income tax. Your family can use it however they need: the mortgage or rent, everyday bills, child care, college, or simply time to adjust.
Curious what a policy pays for? Read the CBIS article “What Is Life Insurance and What Does It Cover?” for a closer look.
How Does Life Insurance Work?
Most policies follow the same four steps:
- Pick a type and an amount. You choose the death benefit and whether you want coverage for a set time or for life.
- Apply. You answer health questions. Honest answers help avoid surprises later. The insurance company then reviews your application and sets your price. This review is called underwriting. Some policies also ask for a short exam.
- Pay your premium. Monthly or yearly payments keep the policy active.
- Your beneficiary is paid. The beneficiary is the person (or trust or charity) you name. If you pass away while the policy is active, they file a claim and receive the death benefit.
The Main Types of Life Insurance
Most policies fall into two groups. Term lasts a set number of years. Permanent is meant to last your whole life. Here’s a quick look at each.
Term Life
Term life covers a set number of years, such as 10, 20, or 30. It usually costs less than permanent coverage for the same amount. When the term ends, coverage usually ends too, unless you renew or convert it. That’s why it’s popular while kids are young or a mortgage is being paid. Learn about term life.
Whole Life
Whole life is meant to last your lifetime, as long as premiums are paid. Payments usually stay the same. The policy also builds cash value, a savings-like part you may be able to borrow against. Unpaid loans can lower what your family receives. Learn about whole life.
Universal Life and Indexed Universal Life (IUL)
Universal life is also permanent, but you can adjust your payments within limits. Indexed universal life (IUL) credits interest based on how a market index performs. Your money isn’t invested directly in the market. A cap limits how much you can earn, and a floor may limit losses. Policy charges still apply, so both types need regular check-ins. Learn about universal life or IUL.
Final Expense
Final expense is a smaller whole life policy for funeral costs and final bills. Applications are often short, with simple health questions. Learn about final expense.
Two related options: mortgage protection sizes coverage to your home loan, and living benefits may let you use part of your policy early if you have a qualifying serious illness. Using them can reduce the death benefit.
Term vs. Whole Life Insurance
| Term life | Whole life | |
|---|---|---|
| Length of coverage | A chosen number of years | Lifelong, while premiums are paid |
| Price for the same amount | Usually lower | Usually higher |
| Cash value | Usually none | Usually builds over time |
| Payments | Often stay level during the term | Usually stay level for life |
| Common uses | Raising kids, a mortgage, working years | Lifelong needs, final costs, a gift to family |
You don’t have to pick just one. Some families pair a small whole life policy with a term policy for the busy years.
Why compare with CBIS?
- Quick quotes. See a sample rate online in minutes, or get quotes on a short call.
- Maybe no medical exam. Depending on your age, health, and coverage amount, some policies may not need a medical exam.
- No extra cost. Quotes and advice are free, with no obligation.
Not sure which fits? A licensed CBIS agent can compare term and whole life with you, free.
Get a QuoteBook a Free Call (opens in new tab)
Figuring Out Your Coverage Amount
There’s no single right number. A simple way to start is to add up what your family would need, then subtract what you already have.
Needs often include a few years of income, the mortgage or rent, other debts, kids’ costs like child care and college, and final costs. What you have includes savings and any current coverage. Coverage through work counts, but it may not follow you to a new job.
It’s smart to take another look after big moments, like a new baby, a new home, or a new job.
Life Insurance Laddering
Laddering means buying two or more term policies with different lengths instead of one big one. Each policy matches a need with its own end date. As each one ends, your coverage steps down, often as those needs get smaller.
Here’s a simple example for a 35-year-old parent:
| Policy | What it’s for | Ends at age |
|---|---|---|
| 30-year term | Income until retirement | 65 |
| 20-year term | The years kids are at home | 55 |
| 15-year term | Matches the mortgage | 50 |
Since less coverage stays in place for the full 30 years, the total premium can be lower than one large 30-year policy. Results vary by age, health, and insurance company. A licensed CBIS agent can help you design a ladder. More on term life.
Want a real number?
What Affects the Cost?
A few things shape the price of a policy:
- Your age when you apply
- Your health history
- Nicotine use
- The coverage amount
- The term length, or whether the coverage is permanent, plus any riders you add
An online sample rate is a helpful starting point. Your final rate is set by underwriting after you apply.
How to Apply: Two Easy Ways
Not sure where to start? Estimate your coverage, get a quote, then check the FAQ. When you’re ready, pick the way that suits you. Families across San Diego County and the rest of California use both options.
Talk with a Licensed CBIS Agent
Compare options by phone or video. Family members are welcome to join.
Book a Free Call (opens in new tab)Get a QuoteOr call (858) 283-7575, Mon–Fri, 8 am–5 pm PT
Apply Online on Your Own
Prefer to do it yourself? Get a quote online in minutes, then apply when you’re ready.
Get a Quote and Apply Online (opens in new tab)Already Have a Policy?
CBIS can look over a policy you already own, free, and talk through whether it still fits your life. Before you cancel or replace a policy, it’s worth checking what you may give up. Get a free policy review.
Life Insurance Terms to Know
Tap a term to see what it means.
Beneficiary
The person, trust, or charity you name to receive the death benefit.
Premium
The payment that keeps your policy active.
Death benefit
The amount paid to your beneficiaries.
Rider
An add-on that changes what a policy does, like living benefits.
Cash value
A savings-like part of a permanent policy that can grow over time.
Underwriting
The insurance company’s review of your application.
Term length
How many years a term policy lasts.
Laddering
Owning a few term policies with different lengths, so coverage steps down over time.
Common Questions
When is a good time to get life insurance?
Many people look into it when they get married, buy a home, or have a baby. Price is based partly on your age and health when you apply, so starting younger often means a lower price.
Can I change my beneficiary later?
Usually, yes. Most policies let you update your beneficiaries whenever life changes, using a simple form. One exception is an “irrevocable” beneficiary, who has to agree to any change.
What happens if I miss a payment?
Most policies have a grace period to catch up. In California, it’s generally at least 60 days. If the premium still isn’t paid, the policy can lapse, which means it ends. Permanent policies with cash value may have other options, so call the insurance company or your agent right away.
Does my life insurance at work go with me if I leave?
Often it doesn’t, or it has to be converted to a personal policy. That’s one reason many people also have a policy of their own.
How long does it take to get covered?
It depends on the policy. Some simpler applications may get a decision the same day. Others that need an exam or medical records can take a few weeks.
What areas does CBIS serve?
CBIS is based in Santee and helps families all over San Diego County, including El Cajon, La Mesa, Lakeside, Poway, Chula Vista and San Diego, plus Temecula. CBIS agents meet by phone or video, so they can help families anywhere in California.
Helpful resources from the California Department of Insurance
Free consumer guides from the state, if you’d like to read more on your own.
- Life Insurance Guide (opens in new tab)
- Life & Annuity consumer page (opens in new tab)
- Life Insurance and Annuities brochure (PDF) (opens in new tab)
Looking for a lost policy, such as one a loved one may have owned? The state’s Life Insurance Policy Locator (opens in new tab) can help you find out if one exists.
Prefer to talk with the state directly? Call the Department of Insurance consumer hotline at 1-800-927-4357.
Coverage, rates, and eligibility vary by insurance company, age, health, and state. Policies are issued by the insurance companies CBIS represents, not by CBIS. Online sample rates are estimates, and your final rate may differ.