Answers to your most common FAQ about Life Insurance
Start here to learn about protecting your loved ones with life insurance.
No one really wants to think about life insurance. But if someone depends on you financially, it’s a topic you can’t avoid. Getting life insurance doesn’t have to be hard (or boring). We have some answers to common questions about life insurance so that you can make informed decisions about protecting your loved ones financially.
Why is life insurance worth it?
Life insurance is important because it’s a simple answer to a very difficult question: How will my loved ones manage financially if something were to happen to me?
What are the different types of life insurance?
Life insurance generally falls into two categories:
- Term life insurance provides protection for a specific period of time (the term), often 10, 20, or 30 years.
- Permanent life insurance provides lifelong protection, as long as you pay the premiums.
What does the average life insurance cost?
The price of life insurance depends on three main factors: your age, your health, and the type of policy you buy. In general, you’ll pay less the younger and healthier you are. You also typically pay less for a term life policy than a permanent life policy.
That said, don’t let your age or health status discourage you from considering life insurance. There are policies available for people of any age as well as those with high blood pressure, diabetes, and a smoking habit. (Just know that you’ll generally pay more for your policy if you’re in poor health and/or smoke.)
Still, wondering the answer to the question of how much does life insurance cost? If so, here’s a working idea:
A healthy 30-year-old can get a $250,000 20-year level term policy for just $13 a month.
That means that if you purchase that policy and pay the $13 a month without fail, your loved ones would get $250,000 if you were to die at any point during those 20 years.
Do I need life insurance?
That’s a great question. And the truth is not everyone does. But ask yourself, “Would someone suffer financially if I died?” If you answered, “Yes,” then chances are you need life insurance.
Life insurance provides cash to your family or loved ones after your death. This cash, known as the death benefit, replaces your income and the many non-paid ways you support your household. Your family can use this cash to pay for expenses like funeral costs, a mortgage, college tuition and more.
Just a few examples of people who often answer “yes” to the question of “Should I get life insurance?” include:
Married or partnered couples
Many partners find it difficult to make ends meet without the other earner’s income in the picture.
Married or partnered couples with kids
In addition to losing one partner’s income, the surviving parent may have to pay for childcare and more without the other parent around to pitch in.
As the sole income earner for your family, you’ll want to think about how to replace your child’s only source of financial support.
From cooking meals to shuttling kids to school to helping with homework, stay-at-home parents perform many critical responsibilities that would be costly to outsource.
Many surviving partners would not be able to maintain the lifestyle they worked so hard to achieve without life insurance.
Depending on the size of your estate, your heirs could be hit with an estate-tax rate of up to 45%. Fortunately, cash from a life insurance policy gives heirs access to tax-free money to pay for immediate costs and more.
Life insurance can help your business in many ways if you, a fellow owner or a key employee were to pass away