Life Insurance: We Break Down the Basics. And It's Not Just for Old People.

A good life insurance policy offers two benefits: peace of mind while you are enjoying life, and financial support for the family after you are gone. Not only does life insurance help with covering the costs of your funeral and end-of-life needs, but it’s also a way to secure a financial future for family members who are depending on you.


No matter your age, if you're an adult, life insurance is an essential part of financial planning. The sooner you purchase a policy, the more flexibility and options you will have for financial security for your beneficiaries.


Types of Life Insurance

How does life insurance work? This agreement requires you to make regular premium payments. Then, should something happen, the insurance provider pays a lump sum of money to your beneficiaries after you die.


There are many options to consider, and most life insurance policies fall into two categories: term and whole life insurance.

  • Term Life Insurance: This model offers a death benefit for a predetermined number of years. Policies usually last between 5 – 20 years. Term life insurance is the most straightforward solution and the model that most people are familiar with. Some of these policies offer the option to convert to a permanent policy if you need additional protection.
  • Whole Life Insurance: Also known as universal or variable universal life insurance, this protection is available for the long term. Choosing an entire life insurance plan is beneficial since you have access to permanent coverage without an end date. Check the guarantees and cash value of each policy since available coverage differs between providers.


Both types of life insurance can be beneficial, depending on your unique circumstances and needs. When choosing a plan, make sure to consider where you are in life and who you are providing for financially. For example, if you have a spouse and children at home, then you’ll likely want a death benefit that is high enough to replace your income.

6 Reasons Why You Need Life Insurance

Do you need to pay for life insurance? Here are a few reasons why you should invest in this insurance policy:

  1. You have children: Whether you already have children or growing your family is in your future plans, then a life insurance policy is a way to continue support after you are gone.
  2. Your relationship status is changing: When you are getting married, it’s a great time to evaluate your family's financial strategy. Joint life insurance policies can help you minimize estate taxes down the road.
  3. You have debt: It doesn’t matter if you are carrying credit card debt, student loans, a mortgage, or any other type of debt – your estate will need to pay these balances if you die. Life insurance can pay off the debt to maximize the amount leftover for your beneficiaries.
  4. You are supporting aging parents: When aging family members depend on you for financial support, a life insurance policy can help them continue receiving care if you should die unexpectedly.
  5. You work at a high-risk job: Is your life on the line when you go to work? Even though employers offer disability insurance and other benefits, it can still be helpful to invest in a life insurance policy as a risk management strategy. Some of these policies pay for both death and disability, which means you have financial support if you are unable to work due to physical problems.
  6. You enjoy extreme adventures: Yep, if you seek thrills through extreme sports, there’s a higher risk of dying from unnatural causes. The life insurance coverage might be a little more expensive since you're considered “high-risk,” but it’s worth the cost if something happens.


How to Buy Life Insurance

Buying life insurance doesn’t have to be complicated. Start by learning about your options and understanding the basics of available coverage. Then, when you compare life insurance policies, you can move forward with confidence in knowing that you are choosing the right plan for your unique needs.

Keep in mind that the application process usually takes between 4 – 8 weeks from the start of the application through completion. Here’s an overview of what to expect when you are applying for a life insurance policy:

  • Get a quote: When working through an insurance broker, you can request a quote to compare multiple insurance policies from different providers.
  • Compare policies: As you receive the quotes, compare the price of each policy and the amount of coverage available. Also, look at the insurer’s reputation and history.
  • Complete an application: Once you choose the right life insurance policy, it’s time to fill out an application. During this process, you will need to answer a range of questions about your health and income.
  • Schedule a medical exam: Life insurance policies require a medical exam, similar to getting an annual physical. Usually, the exam is free – the insurance provider will schedule someone to come to you. Alternatively, you might be able to qualify for a no-exam life insurance policy.
  • Finalize your premiums: The underwriter collects all of your information and determines a final rate. This amount is the premium you will need to pay to keep the insurance policy active. The final rate should be similar to the quotes you received in step 1.
  • Sign on the bottom line: Now it’s time to agree to the policy. You’ll need to sign the documents and send your first payment. Your insurance protection starts immediately when the paperwork is final.

Life Insurance Resources and Companies

If you need new life insurance coverage, there are many options to consider. Here are a few well-regarded companies to compare when you are selecting a plan:

  1. Policy Genius
  2. Ladder
  3. AIG
  4. Lemonade

Another option is to check with your employer. The company you work for may provide a life insurance benefit for employees. Often, these policies are affordable because the company subsidizes the premiums as an employee benefit.


Don’t Delay Life Insurance

Procrastinating purchasing life insurance could be putting your family at risk if something happens unexpectedly. Now is the time to be proactive and secure a life insurance plan as part of your financial planning strategy. 


As you can see from the list above, many options are available, making it easier than ever to secure the necessary coverage.


Life insurance is an investment that brings you peace of mind and sets your family up for a comfortable life if the unexpected occurs.