Life insurance is a contract between you and an insurance company. The main purpose of life insurance is to provide a financial benefit to your loved ones in the event of an early death.
Typical reasons for buying life insurance include:
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Paying funeral expenses
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Providing mortgage assistance
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Supplementing educational expenses for children and spouse
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Replacing lost income
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Helping to protect the value of an estate after the insured passes on
When you should consider life insurance
Traditional families
At this point in your life, you may have young children, or teenagers attending college soon that you want to help protect and provide for in the future. You may be faced with concurrent long-term expenses, such as saving for your retirement, while at the same time funding a child’s daycare expenses or college tuition.
Married/domestic partners
In order to plan for and help protect your loved ones in the future, it’s important to think about the financial requirements that may arise with each milestone – throughout career changes, home ownership, and saving a nest egg for you and your spouse or partner.
Empty nesters/retirees
With your working years nearly complete, now may be the time to help protect your loved ones and strategically allocate your savings. By doing so, you could be better prepared and more comfortable in the years that lie ahead.
Singles
Whether or not you have dependents, life insurance could be beneficial in future situations. Suppose you had unsettled debt at the time of your death. The death benefit from life insurance could help pay down any existing debt.
Term life insurance policies provide a stated benefit upon the death of the insured, provided that the death occurs within a specific period.
Term life insurance explained
Term life insurance provides coverage for a certain time period. It’s often called “pure life insurance” because it’s designed only to protect your dependents in case you die prematurely. If you have a term policy and die within the term, your beneficiaries receive the payout. The policy has no other value.
You choose the term when you buy the policy. Common terms are 10, 20 or 30 years. With most policies, the payout, called the death benefit, and the cost, or premium, stay the same throughout the term.
When you shop for term life:
Choose a term that coincides with the years you’ll be paying the bills and want life insurance coverage in case you die early.
Buy an amount your family would need if you were no longer there to provide for them. The payout could replace your income and help your family pay for services you perform now, such as child care.
Ideally, your family’s need for life insurance will end around the time the term expires: Your kids will be on their own, you’ll have paid off your house, and you’ll have plenty of money in savings to serve as a financial safety net.
A Universal Life Insurance policy is a flexible way to help protect your loved ones and build tax-deferred cash value.
Universal life insurance explained
Universal life insurance offers lifelong coverage, provides flexibility when it comes to paying premiums and choices for how the policy’s cash value is invested. A standard universal life insurance policy’s cash value grows according to the performance of the insurer’s portfolio and can be used to pay premiums. Variations such as variable and indexed universal life insurance give you options for how to invest the policy’s cash value. Universal life insurance is often compared to whole life insurance, a policy that also offers lifelong coverage, but is less expensive and offers more policy options.
Universal life insurance is a form of permanent insurance, meaning coverage can last for your lifetime so long as premiums are paid. This is in contrast to term life insurance which only provides coverage for a set period of time, such as 10 or 20 years. Universal life insurance can be purchased by individuals but is also regularly offered by employers as group universal life insurance.
Beyond lifelong protection, there are a few additional features of universal life:
You can withdraw money or borrow against it.
Your cash value earns interest.
You have flexibility with premiums.
You can adjust the death benefit.
Ideally, your family’s need for life insurance will end around the time the term expires: Your kids will be on their own, you’ll have paid off your house, and you’ll have plenty of money in savings to serve as a financial safety net.
Whether you're looking for the affordability of term insurance, the lifelong protection and cash value of permanent insurance, or a combination of both, we have options to fit your needs and budget. Decide which coverage is right for you before getting a life insurance quote.
Term Life
Whole Life
Universal Life
Flexible coverage flexible premiums.
Lifetime coverage with access to cash value.
Simple, affordable coverage for a period of time.
Advantages
Permanent protection and flexibility.
Life insurance for life-long needs.
Appropriate for short-term coverage needs.
What It's Used For
Yes
Guaranteed for the life of the policy provided premiums are paid as required.
Yes
Provided premiums are paid as required.
Guaranteed Death Benefit
Yes
Cash value growth is tax-deferred.
Yes
Cash value growth is tax-deferred.
Available only for Return of Premium Term.
Cash Value
Yes
Guaranteed for the life of the policy.
Lifetime Level Premiums
Yes
It is possible coverage will expire when either no premiums are paid following the initial minimum premium or subsequent premiums are insufficient to continue coverage.
Yes
Guaranteed for the insured's lifetime, provided premiums are paid as required.
Lifetime Coverage
Yes
Available for the insured's lifetime.
Flexible Premiums
Universal Life Policies
Universal Life
Survivorship Universal Life
Joint Universal Life
Whole Life Policies
Whole Life
Limited Pay 10, 15, 20
Single Premium Life
Final Expense ($10,000 Whole Life in NY)
Term Life Policies
Select Term 10, 20, 30
Return of Premium 20, 30
Instant Answer Term
Available Policies
Dividends
Yes
Eligible to earn dividends; however, dividends are not guaranteed.
Life insurance calculator
When you build your life, you build your future. That's why it's so important to include life insurance in your plans, so you can be better prepared for the unexpected – whether it happens today, or 20 years down the line. You purchase life insurance for the death benefit it provides – but how do you determine how much coverage you need? Use our life insurance calculator to find out.
---- Page source & information retrieved from Farmers & Nerdwallet.com