Make the right life insurance choice
This guide makes the basics of life insurance easy to understand, so you can decide how much coverage you need, which policy features to look for, and what to expect when you buy.
This guide gives you the knowledge you need to make the life insurance choices that are right for you and the people who depend on you.
insuring the future
a complete financial plan includes insuring your life.
When you think of financial planning, you probably think about saving for goals like retirement, buying a house, paying for education, and otherwise achieving the future you want for your loved ones. There is another possibility to consider in your financial plan, however: What happens if you’re no longer around to provide the income necessary to meet these goals? If your family depends on your financial contributions for their security, without you there to support them, their goals might be at risk. For example, if you have young children, you may be saving for their college educations. Without you, they might have a hard time meeting that goal. Your spouse may depend on your income to help pay the mortgage and meet everyday living expenses. You may have other family members or loved ones, such as elderly parents or an unmarried partner, who would be forced into a lower standard of living without you.
Life insurance is a way you can provide for the people you care about so that they can still have the lives you want them to have, even if you can’t be there.
What Life Insurance Does
Life insurance can cover final expenses, or costs associated with your death—for example, funeral and burial arrangements, any potential legal expenses involved in settling your estate, and your debts. But life insurance can do much more. You can use life insurance to replace the income you would have provided if you’d lived as long as expected. That would mean the people who depend on you are protected from the financial hardship that could come from losing you. They can use that income replacement to pay for their living expenses, maintain their standard of living, and save for their goals.
types of life insurance
you can buy life insurance that protects you for a limited period of time or stays in effect until you die
All life insurance has some similarities. You pay premiums to a life insurance company in exchange for its promise to pay a certain amount of money, called the death benefit, to your primary beneficiary, whom you identify when you buy the insurance. But as you explore the coverage options, you may find that the details seem complicated because the terminology is unfamiliar. Here’s what you need to know:
The policy is the document that spells out the agreement between you and the company that insures you. The first page states the face value, which is the amount the insurer agrees to pay as the death benefit following your death. If you own the policy, that makes you the policyholder. You have all the rights of ownership, including the right to
Change the beneficiary or add other beneficiaries
Assign, or transfer, ownership to someone else
Access the policy’s account value if it has one
If you’re the person whose life is covered by the policy, you’re the insured. You can own a policy on your own life or on the life of another person. Similarly, another person can own a policy where you’re the insured. Your policy may last for a specific term, or period of time, such as 5, 10, 20, or 30 years. Or you can buy a permanent policy, which means it covers you as long as you’re alive. With either term or permanent insurance, however, you must be up-to-date on your premium payments for your policy to be in force. If you fail to pay, you might end upwith a lapsed policy. In that case, no death benefit would be paid if you were to die.