When you hear the words life insurance, what comes to mind?

For a lot of people, it feels complicated, overwhelming, or like something you’ll figure out “later.” Some people even wonder if it’s a scam. But at its heart, life insurance is really simple: it’s about making sure the people you love are taken care of if the unexpected happens.

How Life Insurance Works

Life insurance is a contract. You pay a set amount (your premium) every month or year. If you pass away while the policy is active, your family or chosen beneficiaries receive a death benefit—a lump sum of money they can use however they need.

That money could help with:

  • Keeping up with rent or mortgage payments
  • Covering childcare or education expenses
  • Paying off debts like student loans or car payments
  • Handling final expenses like medical bills and funeral costs
  • Simply giving your family breathing room so money isn’t their first worry in a crisis

The Two Big Types of Life Insurance

Think of life insurance like two different toolboxes. Each has its purpose, and which one you pick depends on what you’re trying to build:

1. Term Life Insurance

  • Lasts for a set number of years (like 10, 20, or 30).
  • Usually the cheapest and simplest option.
  • Best for covering temporary but big responsibilities like raising kids or paying off a mortgage.

Example: You’re 30 years old, buy a 20-year term policy, and during those 20 years your family would get the payout if something happened to you. By the time it ends, maybe your kids are grown and your house is nearly paid off, so you don’t “need” the coverage anymore.

2. Permanent Life Insurance

  • Lasts for your entire life (as long as you keep paying premiums).
  • More expensive, but it builds cash value, like a savings component you can borrow against.
  • Sometimes used for long-term planning, wealth transfer, or people who want lifelong coverage.

Example: A parent wants to guarantee their child with special needs will always be financially protected. Permanent insurance might make sense here.

For most people? Term life is enough. It’s affordable, straightforward, and covers you during the years when your loved ones depend on you most.

How Much Do You Really Need and What Will It Cost?

This is usually the big question: If I buy life insurance, how much should it be for, and what will it cost me each month?

Figuring Out Your Coverage

A common rule of thumb is 7–10 times your annual income. But that’s not set in stone. A better way is to think through your actual situation:

  • Income replacement: How many years would your family need support?
  • Debts: Mortgage, car loans, student loans—what would still need to be paid off?
  • Future expenses: College tuition, childcare, or medical needs.
  • Final costs: Funeral and medical bills can add up quickly.

For example, if you make $60,000 a year, you might consider a $500,000–$600,000 policy. That could cover several years of living expenses, pay off debts, and provide a cushion for the future.

Balancing Cost vs. Benefit

Here’s where most people are surprised: life insurance often costs less than expected. Especially term life insurance.

  • A healthy 30-year-old might pay $20–$30 a month for a $500,000, 20-year term policy.
  • That’s about the same as a couple streaming subscriptions or a weekly takeout order.

Think of it this way: would you trade the cost of one dinner out each month for the security of knowing your family could stay in your home and pay the bills if something happened to you? That’s the cost vs. benefit of life insurance.

“But I Thought Life Insurance Was a Scam?”

We get why you feel that way. A lot of people do. And honestly, the insurance industry hasn’t always done itself any favors. There are pushy sales tactics, confusing products, and horror stories about people who thought they were covered and weren’t. It’s no wonder it feels shady.

But the idea of life insurance itself—the core purpose—isn’t a scam. It’s actually pretty simple: you pay a little each month, and if something happens to you, your family gets a lump sum to keep life going. That’s it.

Where it feels like a scam is usually in one of three spots:

  • Buying the wrong thing. Someone sells you a policy you don’t really need or can’t afford.
  • Not understanding the details. Every policy has limits, and if no one explains them clearly, you end up disappointed.
  • Never updating it. Life changes (marriage, kids, buying a house) and if your coverage doesn’t change with you, it can fall short.

So, the product itself isn’t the scam, it’s the mismatch, the misunderstanding, or sometimes, unfortunately, the salesperson.

The fix? Know what you actually need (for most people, that’s simple, affordable term life), understand exactly what you’re buying, and revisit it as your life changes. Do those three things, and it’s one of the most straightforward and valuable protections you can have for your family.

Big Picture: Is Life Insurance Really Worth It?

Honestly, yes, it usually is. Here’s why:

Life insurance isn’t about you. It’s about the people who would have to pick up the pieces if something happened to you. If you have anyone who depends on your income like a spouse, kids, even aging parents… it’s worth it, because that money makes the difference between stability and struggle.

For most people, the cost is surprisingly low compared to the benefit. Think about it: $20–$30 a month could create a half-million dollar safety net. There’s almost nothing else in personal finance where such a small investment gives such a big payoff.

Is it always worth it? Not necessarily. If you’re single, have no dependents, no big debts, and no one would be financially impacted by your death, then you may not need it right now. But for the majority of people who have a family, a partner, or even just a mortgage, they’d feel the loss financially. And that’s where life insurance matters.

So, is it worth it? If protecting your loved ones and buying them time, breathing room, and security matters to you, then yes. It’s one of the most practical, loving financial decisions you can make.

Taking the Next Step

Life insurance isn’t about planning for death, it’s about planning for life. It’s about giving your family the freedom to grieve, heal, and move forward without money being an added weight.

At Pathway, we’re not an insurance company. We don’t sell policies or earn commissions. Our only goal is to help you understand your options so you can make the choice that feels right for your situation.

Want to learn more? Pathway Financial Education is hosting a free online workshop, “Securing Tomorrow Today: The Vital Role of Life Insurance,” on Wednesday, September 10 from 7–8:30 PM EDT. Insurance expert Dewayne Burkett will walk through the basics in plain language. Register here.

Can’t make it? Or have specific questions about how life insurance applies to your family, your budget, or your goals? You can also set up a free 1:1 coaching session with us. We’ll walk through your concerns together, with no pressure and no sales pitch.

Even if you do nothing else today, remember: the best time to prepare for tomorrow is today.