Life Insurance Basics

Life insurance is a useful tool to help provide a financial safety net for your loved ones after you pass away.

How does a term life insurance policy work?

  • When you buy a term life insurance policy, you pay a monthly or annual premium to the life insurance company for a specific amount of time called the term. If you pass on during the specified term, your beneficiaries will receive a cash payment.¹

Who should buy a life insurance policy?

  • If your passing would cause financial challenges for your loved ones, then you both can benefit from the protection life insurance provides.
  • Life insurance can help you if you would like your loved ones to receive payments to cover housing, personal and business debts, healthcare, funeral costs and any unforeseen expenses.

What type of life insurance is best?

The two main types are term life insurance and permanent life insurance. And the best type for your needs depends on the purpose of the policy, term length, and the premiums.

Term life insurance:

  • Coverage lasts for a specified “term” up to 40 years.
  • Your beneficiaries receive a guaranteed lump-sum cash payout if you pass away during the policy’s term.¹
  • The policy does not build cash value over time.
  • Typically, premiums are more affordable than permanent life premiums.

Permanent life insurance:

  • Two main types of permanent life insurance exist: whole life and universal life.
  • Coverage lasts your entire lifetime, as long as the premiums are paid.
  • Premiums are fixed with whole life plans and go up each year with universal life plans.
  • Your beneficiaries receive a guaranteed lump-sum cash payout upon your passing, regardless of when it happens.¹
  • Permanent life policies build cash value over time. For some of them, like an Indexed Universal Life Policy, this may increase the death benefit while the cash account grows.
  • Typically, premiums are more expensive than term life premiums.

What about group life insurance through an employer?

  • Employer-sponsored group life insurance may only cover up to twice your annual income. Financial experts generally recommend 10–15 times your annual income as the minimum coverage.
  • Most employer-sponsored policies terminate if you leave the company, which could leave your loved ones unprotected when they need it most.

How much coverage is right for me?

Your needs are unique, but calculating your ideal coverage is simple and straightforward.

Use our calculator

To make this process easy for you, use our easy insurance calculator to estimate your coverage needs.

What affects insurance premiums?

What affects insurance premiums?

A range of factors

Your policy’s premium depends on a range of factors such as: policy type, coverage amount, and personal details like age, gender, lifestyle, and health. For term policies, the length of the term also affects the premium. Some of these factors are under your control; for instance, non-smokers usually pay significantly less than smokers.

What's my ideal term length?

While policies with shorter terms and smaller coverage amounts may be cheaper, the coverage they provide may not be sufficient for your needs. The ideal policy should sufficiently cover your family until your goals are met, such as when existing debts are cleared, retirement income is secured, or your children have become financially independent.

Get personalized suggestions

If you are not sure, reach out to us at (800) 404-9038, and one of our licensed specialists will go over your needs and suggest options that are right for you.

When should I get life insurance?

Life insurance rates tend to rise by an average of 8-12% annually. By applying today, you can lock in a more affordable rate, ensuring your premium stays constant throughout the duration of your policy. If life insurance is right for you, there is no better time to start than now.

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