What to Look for in a Life Insurance Policy

Underwritten by United of Omaha Life Insurance Company

09.17.2026 | 8 min read

Know the types of life insurance policies

Deciding how much life insurance you need is the first step to getting a policy that is right for you. A term life insurance policy provides coverage for a set period, while whole life insurance, also known as permanent life insurance, can last your entire lifetime. There is no right or wrong life insurance policy, so make sure to find one that best fits your needs.

Choosing the right life insurance company for your policy is also important. There are dozens of companies that sell life insurance, but they are not all the same. When comparing life insurance policies, research various companies and make sure to find one that is trustworthy. Your life insurance policy should make things easier for your loved ones during a tough time in their lives, so be sure to choose a company with a good reputation that will treat them with care.

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How much life insurance do you need?

One of the most important decisions you’ll make when buying life insurance is determining how much coverage is appropriate. The goal is to help ensure your loved ones can maintain financial stability, even if you’re no longer there to provide support.

Income replacement and debt

A starting point for figuring out how much life insurance you need may be the income-replacement approach. Many financial professionals recommend coverage equal to 10 to 15 times your annual income.¹ This can help replace your lost earnings for several years, giving your family time to adjust and plan.
You’ll also want to consider outstanding debts and future financial obligations. This may include a mortgage balance, car loans, credit cards, or student loans. For families with children, education costs can also affect your coverage needs.

Final expenses and assets

Final expenses are another factor that may be overlooked. Funeral and burial costs, medical bills, and other end-of-life expenses can add up quickly. Life insurance can help prevent those costs from becoming a financial burden for your loved ones.
Finally, take stock of your financial situation, including your savings and existing coverage. Employer-provided life insurance, personal savings, retirement accounts, social security and other assets may already offer some level of protection. A life insurance policy can help fill any remaining gaps.

An easy way to find out how much coverage you may need in a policy is to use a life insurance calculator. From there, you can confidently shop for life insurance policies and feel more comfortable that your family can have more financial security.

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Types of life insurance policies explained

Understanding how different policies work can help make it easier to choose coverage that aligns with your financial goals.

1. Term life insurance

Term life insurance provides coverage for a specific period, such as 10, 20, or 30 years. It’s often chosen for its relative affordability and simplicity, making it a popular option for some families who want coverage during their working years or while paying off major expenses, such as a mortgage.

If the insured passes away during the term, the policy pays a death benefit to the beneficiaries. If the term ends and the policy is still active, coverage may expire unless it’s renewed or converted, depending on the policy terms.

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2. Whole life insurance

Whole life insurance is a type of permanent life insurance that provides coverage for your entire lifetime, as long as you pay your premiums. In addition to a guaranteed death benefit, whole life policies are permanent life insurance policies that build cash value over time, with a guaranteed component of growth.

This type of policy may be used as part of a long-term financial strategy and can offer some predictability and lifelong protection.

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3. Other permanent options

Other permanent life insurance options may offer different levels of flexibility in premiums or death benefits. Universal and indexed universal life insurance are examples of permanent policies with flexible components. These policies are designed to last a lifetime and may appeal to individuals who want coverage that can adapt to changing financial needs.

What does a life insurance policy look like?

A life insurance policy can include several core components that outline how coverage works and what to expect. Those components may include:

Death benefit: The amount paid to beneficiaries if the insured passes away while the policy is active.
Premium schedule: How much you pay for coverage and how often payments are due.
Policy term: The length of time coverage lasts for term policies or confirmation oflifetime coverage for permanent policies.
Beneficiaries: The individuals or entities who receive the death benefit.
Riders: Optional features that can add flexibility or benefits to a policy when purchased through an agent or producer.
Exclusions and limitations: Specific situations where coverage may be limited or not apply.

Understanding these elements can help you compare policies more effectively and avoid surprises down the road.

Key features to look for in a life insurance policy

While coverage needs may vary, certain features can help indicate whether a life insurance policy is well-suited to your situation.

1. Coverage amount and term length

The right coverage amount should reflect your financial responsibilities and long-term goals. For term life policies, the term length is equally important. Many people choose a term that aligns with major milestones, such as paying off a mortgage or retiring.

2. Premium affordability and stability

A policy should fit comfortably within your budget. Look for premiums that are predictable and manageable over time. Consistent premium structures may make long-term planning easier and help ensure coverage remains in place.

3. Riders and optional benefits

Some policies offer optional benefits, known as riders, that can enhance coverage when purchased through an agent or producer. These offer customization to a policy for certain circumstances that may arise when you own the policy.

4. Policy flexibility

The flexibility of your life insurance policy can be an important feature, especially if your needs change over time. You should check a policy’s:

Convertibility: Some term policies allow conversion to permanent coverage without a medical exam.
Renewability: Certain policies may allow you to renew coverage after the initial term, though premiums may increase.

When evaluating these features, it’s also worth considering the insurer’s reputation. Financial strength ratings, industry awards, and a long history of serving policyholders can provide added confidence when choosing a life insurance provider.

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Understanding policy exclusions and limitations

Every life insurance policy includes exclusions and limitations that define when coverage applies.

For example, many policies include a suicide clause, which limits payouts if death occurs within a specified period after the policy is issued. There is also typically a contestability period, during which the insurer can review and contest claims based on misstatements in the application.

Misrepresentation of health or lifestyle information can put coverage at risk, which is why accurate disclosure is essential. Some policies may also include waiting periods before certain benefits apply.

Reviewing these provisions carefully can help you understand how your policy works and when benefits are payable.

Tools that can help you choose the right policy

Choosing life insurance doesn’t have to be overwhelming. The right tools can help clarify your needs and guide your decision.

Quote comparison tools

These allow you to review coverage options and pricing side by side. Speaking with a knowledgeable agent or producer can also provide personalized insight and answer questions specific to your situation.

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Needs analysis resources

These tools can also be especially helpful. For example, Mutual of Omaha’s Life Insurance Calculator and Final Expense Calculator are designed to help you estimate appropriate coverage based on your financial picture. These tools can help support informed decision-making and encourage thoughtful planning rather than rushed choices.

Final thoughts: Making an informed life insurance decision

Choosing the right life insurance is a personal decision, and the right policy is one that aligns with your financial goals and family needs. When looking for life insurance, you should:

Understand how much coverage you need and why
Compare policy types, features, and costs carefully
Review exclusions and limitations so there are no surprises
Use trusted tools and resources to guide your decision

With the right information and a clear understanding of your priorities, you can choose coverage with confidence and enjoy the peace of mind that life insurance is meant to provide.

Frequently Asked Questions (FAQs)

1. How do I know how much life insurance coverage I need?

Consider income replacement, outstanding debts, future expenses, and existing savings to estimate an appropriate coverage amount. A life insurance calculator can be helpful in determining your needs. Look for coverage that fits your financial needs, offers budget-friendly premiums, and comes from a financially strong insurer.

2. What does a life insurance policy include?

A life insurance policy typically should include a death benefit, premium details, beneficiaries, policy terms, and exclusions. The most important features will depend on your financial needs and goals, but some features of a life insurance policy to consider include the coverage amount, flexibility, and the insurer's reputation.

3. Is life insurance really necessary if I already have savings?

While savings can help, life insurance may provide added protection and help cover immediate expenses or income loss. Life insurance can be an extra layer to help provide some financial protection for your family.