Term life insurance: when you really need it (and how to size the cover)
Term life pays a lump sum only if you die during the covered period. It is protection, not investment: it is for people who have someone relying on their income.
What it is
A term life policy (TCM in Italy, "temporanea caso morte") pays a lump sum to the beneficiaries if the insured dies within the contract term (say 20 years). If nothing happens, nothing is paid out: the premium is the price of protection, as with car insurance. That is why it usually costs far less than "life" policies that also promise a return.
Who really needs it
- People with young children or others relying on their income.
- People with a mortgage, alone or as a couple, who don't want the debt to fall on the survivor.
- People with a business or personal debts guaranteed by relatives.
If you live alone, have no debts and nobody depends on you, you almost certainly don't need it. And if you already have enough wealth to cover your loved ones' needs, cover can be lower.
How to size the cover
A simple method: add up what your loved ones would have to face and subtract what they already have. Example with made-up numbers:
| Item | Amount |
|---|---|
| Remaining mortgage to clear | €150,000 |
| Income to replace: €25,000 a year for 2 years | €50,000 |
| Indicative cover | €200,000 |
From this subtract savings, other cover (including any from your employer) and any survivors' pensions your household may be entitled to: check with INPS or a patronato. The result is the order of magnitude to request in quotes.
The term should follow the need: if the children will be independent in twenty years and the mortgage ends in twenty, twenty years is sensible. The cover can also be decreasing, in line with the shrinking mortgage.
What it costs and how to compare
The premium depends on age, health, habits (smoking), cover amount and term. Get several quotes for the same amount and term, and check: exclusions, waiting period, what happens if you miss a payment, whether you can raise or lower the cover. Contracts with hidden costs or an investment component deserve careful reading: see the guide on unit-linked and multi-branch policies.
Tax relief
Premiums for life policies with a death benefit and for accident policies qualify for a 19% tax deduction on up to €530 of premiums a year, across all such policies together: at most €100.70 of tax. It is small compared with the value of the cover, but not nothing.
What to avoid: paying "twice" for the same protection, or buying a policy with an investment only because "at least something comes back". Separating protection from saving makes it clearer what you pay for what.
If you have a mortgage, it may make sense to review the whole picture: pay off the mortgage or invest.
Sources
- Centro Fiscale, insurance deductibility in the 2026 tax return: 19% on €530
- IVASS, consumer guide to insurance contracts
The official 730 form instructions remain the reference for amounts and requirements of the deduction.
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Book a free callFor information and education only. This is not investment advice or a personal recommendation. Tax and pension rules change over time: always check current requirements with official sources (INPS, Agenzia delle Entrate).