I need to set up full disk encryption of the linux in my laptop.

Questions:

1. Does an encryption key on the USB protect against rubber-hose cryptanalysis?
2. Is it true that key on pendrive is more risky than password because someone can steal the usb key and access data without the need of password?
3. What do you think about simply encrypting the disk with LUKS and do encrypted backups?

My threat model is someone stealing my laptop rather than FBI, government :-D

Thank you, lester29

4, 5. someone can lose that flash drive or it can just stop working.
6. they will not steal the laptop, but your data when the drive is unlocked and in use (and connected to the net).
7. or probably they will steal it together with that pendrive

Once upon a time we used a card (such as Visa or Mastercard) to lock/unlock the host, now we use fingerprint or face recognition.

LUKS is quite good as far as I know.

Encrypted home directories might be the way to go. However, I'm still not sure about LUKS on removable media. I have several backups and the old drives, which are unencrypted and they Rsync nicely. The old drives which are encrypted with LUKS go noticeably slower. The newer drives with LUKS are really slow and take an hour+ for what takes single digit minutes on the first mentioned set. Much of that seems to be a problem with the new drives which furthermore run for up to 8 seconds at a time before the light goes off and the platter stops spinning after being unmounted and ejected.

tldr; you'll just have to test performance on the hardware you happen to have available