Why Do I Need Life Insurance?
How do you determine whether or not you need life insurance? Your answer will vary based on your family, the amount of debt you have and other financial factors.
Life insurance can help your family pay for funeral costs, but it can also help cover more long-term expenses such as mortgage payments and college tuition. Explore the many benefits of life insurance and learn the difference between term life and permanent life insurance policies.
Who Needs Life Insurance?
Life insurance is an option for people who want to leave behind something positive in the wake of their death. People in a number of different situations could benefit from having a life insurance policy, such as:
- People supporting their family with their income
- Stay-at-home parents
- Anyone with outstanding debts
- People with high-risk jobs
- People that want to leave an inheritance
- Business owners
Do other people depend on your income for their well-being? A life insurance policy could help protect them financially and keep them more secure moving forward after your death.
What Do Life Insurance Policies Pay For?
Life insurance can help cover any number of costs, which can include:
- Funeral services and preparation
- Burial and cremation services
- Estate settlements
- Outstanding debts
- Outstanding medical bills
- College loans
- Mortgage payments
- Loss of income
- Business expenses
Many people in the U.S. consider life insurance a vital tool as part of their savings and retirement plan. The benefits listed above vary from policy to policy, so it’s important to understand how each policy works.
Term Life and Permanent Life Insurance
The two most common types of life insurance are term life and permanent life.
- Term life insurance policies offer coverage during a period of time, or "term," of typically up to 30 years. If you die during the policy's term, a death benefit will be paid to your named beneficiary(ies). These policies often carry a lower premium than permanent life policies and may allow you to renew at a higher rate once your policy expires.
- Permanent life insurance policies provide coverage for the rest of your life and can accrue a cash value over time. Your premiums typically never rise, though this could vary based on your plan.
Other types of life insurance such as variable, guaranteed acceptance, group term life and others often offer additional unique benefits and options. Life insurance premiums are determined by your age, health and a number of other factors.
*Applications for insurance may be subject to acceptance by insurer. Rates and coverage amounts will depend upon the carrier selected.