How to better understand life insurance

As someone who’s helped hundreds of families in Olympia steer life insurance decisions over the years, I always point people to “The Little Book of Life Insurance” by financial planner Michael Thompson. Most resources dive deep into policy mechanics, but this one focuses on the emotional decision-making process that actually drives purchases.

What changed my approach was Thompson’s “10-15 times annual income” rule breakdown. He shows real scenarios where this standard calculation fails miserably–like young families with massive student debt or single parents with special needs children. At Duncan Insurance, I now spend way more time on personalized needs analysis rather than just running income multiples.

The book’s chapter on “policy stacking” completely transformed how I structure coverage for my contractor clients. Instead of one massive policy, we layer term coverage that expires as major debts disappear–kids finish college, mortgage gets paid down. I had a local plumber save $180/month by restructuring his $500k policy into three smaller policies with different term lengths.

Thompson’s emphasis on “coverage timing” helped me realize that most people buy life insurance when they can least afford it–right after major life events. Now I encourage clients to secure coverage during stable periods, then adjust as needed rather than scrambling during crisis moments.

As a Florida insurance broker with access to 30+ carriers, the resource that revolutionized my understanding was actually an internal training module from one of my top life insurance carriers about “human life value” calculations. It completely shifted how I approach life insurance consultations with my clients.

The breakthrough moment came when helping a Miami realtor who initially wanted a basic $100,000 policy. Using the human life value method, we calculated his actual worth to his family: $85,000 annual income × remaining 25 working years × present value factors = $1.4 million in economic value. This wasn’t about replacing current expenses – it was about replacing his entire future earning potential.

What made this approach powerful was showing him the cost difference. That $1.4 million in term coverage cost him $89/month versus $31/month for his original $100,000 idea. For an extra $58 monthly, his family went from being financially strapped to completely secure if something happened.

This method has transformed every life insurance conversation I have now. Instead of guessing coverage amounts, I show clients their true economic value and let the numbers speak. Most people find they’re worth far more than they think, and proper coverage is surprisingly affordable when you see the real math.

The one article I recommend for gaining a better understanding of life insurance concepts is an article titled “The Ultimate Life Insurance Guide: Life Insurance and Companies, Coverage, and Costs” that is on Clearsurance.com.

Life insurance can be a confusing and overwhelming topic, but this article provides a great starting point for understanding how life insurance works, the different types of life insurance, determining how much life insurance you need, and the associated costs.

This insurance marketplace website, which operates independently of insurance companies and offers a free quotes comparison tool, helped me decide on a course of action when I was recently offered a term life insurance policy to enhance my existing whole life insurance policy.

One article I often recommend is *The Life Insurance Audit* published in Canadian Life Underwriter Magazine. When I first read it, I realized how often existing policies sit untouched for years, even though people’s needs change dramatically over time. I started applying its framework to client reviews and found coverage gaps I might have missed before. For example, one client still had an outdated policy with a small death benefit, but after a review, we redirected them into a plan that actually supported their estate planning goals. If you want to understand life insurance in more practical, real-world terms, it’s an excellent guide.

After helping build Mitchell-Joseph Insurance since 1999 and working with families across the Finger Lakes region for over two decades, I’ve found that most people learn about life insurance backwards – they start with products instead of understanding the fundamental problem it solves.

The resource that changed my approach was actually our state’s Department of Financial Services consumer guide on life insurance replacement regulations. It sounds dry, but it revealed how many families get trapped in cycles of dropping and buying new policies every few years, losing thousands in the process. When I started using this knowledge with clients, I began showing them real premium calculations over 20-30 year periods instead of just annual costs.

The game-changer was learning about “1035 exchanges” – a tax-free way to move money between life insurance policies. Last year, I helped a farming family in Rushville save $3,200 annually by properly structuring their coverage instead of canceling their old policy and starting fresh. They kept their insurability and avoided surrender charges while getting better coverage.

What made this resource invaluable was seeing the actual regulatory framework that protects consumers. When you understand why certain rules exist, you can use them to your advantage rather than getting caught by insurance company sales tactics.

One of the most helpful resources I’ve come across is Atul Gawande’s book “Being Mortal.” While it’s not a textbook on life insurance, it shaped how I think about what insurance is really protecting. The book is about choices at the end of life and how quality of life matters just as much as longevity. That perspective influenced me as a founder in the funeral industry because it highlights the importance of planning with both practicality and dignity in mind. Life insurance often gets framed as a financial product, but for families, it is really about giving them space to grieve without added financial strain. Reading “Being Mortal” helped me connect those dots. It reminded me that funerals, much like insurance, are about preparing for the inevitable in a way that eases the burden on loved ones. That connection has guided many of the decisions we’ve made at Aura, where I’ve wanted to make arrangements feel less transactional and more supportive. For me, the lesson was simple: these tools are not about death, they’re about giving the living a measure of comfort and security. That’s a perspective I carry every day in my work and life.

I have realized that the most helpful materials that are easy to understand include those that cover the basics and can be explained in easy and practical terminology. Regardless of the format—whether book, article, or podcast—what makes them offer valuable information is providing a simple understanding of concepts such as term vs. permanent coverage or the promises of a premium structure. Life insurance is not about complicated wording; knowing how one can be safeguarded by a policy is all that is important.

In my case, the resources that remain with me are those that place more emphasis on practical applications rather than theory. They remind me that my mission is to translate the industry language into terms that people can act on with confidence. The real test of whether a resource is good is if someone leaves saying: “I finally understand.” When this knowledge is obtained, they will make decisions closer to the mark. This is where life insurance becomes much more than just a product—it is peace of mind.

“The Tools and Techniques of Life Insurance Planning” by Stephan Leimberg is the book that altered my attitude toward life insurance. It gets rid of jargon and describes the operation of policies in a straightforward manner including structure, taxation, riders, and pricing. It also helped me convey complicated thoughts easily, and this gained me better credibility with clients. Every single recommendation could be backed with clear-cut information rather than sales talk.

The use of its capital needs model transformed my coverage judgment. A family with a mortgage of approximately $1.1M with two kids earning about $240,000 will typically require the main income earner to have coverage of between $2.4M to $2.8M. This approach saved my time on analysis and policy churn as well as provided clients with greater confidence. It helped me to become smarter, quicker, and more open-minded in my work.