Life Insurance Guide
What is life insurance?
- If you were to die, would you leave behind debt?
- Would your loved ones face financial hardship?
- Do you have dependents, own a small business or have a sizable personal estate?
If the answer to any of these questions is yes, you need life insurance.
Buying life insurance while you are young and healthy can help you secure lower premiums. Your best bet is to get life insurance as soon as it becomes a must-have in your life. Life events such as marriage, a new baby, and even starting a new business can trigger a need to put a policy in place.
Expanding your family? Quility has options to support your finances during this exciting time (but timing is everything).
We are here to help you find the best-fit plan for your life. Get a free quote and apply online in 10 minutes for a personalized term life insurance policy.
How much life insurance do I need?
When you are shopping for life insurance, you will see a lot of information out there about term lengths and coverage amounts. There is not a one-size-fits-all answer for life insurance: the perfect fit depends on your unique circumstances. You will want to look at your income, your health, your family, and your goals to determine how much insurance you need. And keep in mind that your policy can grow with you, so there is no wrong answer.
To determine how much life insurance you need, ask yourself:
Types of Life Insurance
When it comes to buying life insurance, you have a lot of options.
Term Life Insurance
Term life insurance provides coverage for a specific period, usually ranging from 10-30 years. If you die while the policy is in force (during the time you’re paying premiums), your beneficiary receives a death benefit.
If you reach the end of your coverage period, you and the insurance company simply part ways. If you still need life insurance, you can extend coverage for a new term or convert your policy to permanent life insurance (just keep in mind your premiums might increase).
Use this equation to figure out how much term life insurance you need.
Your Salary x 10 = Your Coverage Amount
$50,000/year x 10 = $500,000 policy
10 year
20 year
30 year
Your policy term length depends on your age, how long you'll have financial dependents, or possibly the term of your mortgage.
Permanent Insurance
Permanent life insurance offers guaranteed coverage and is sometimes broken down into a policy called universal or whole life.
Universal life insurance is an affordable permanent life insurance option with coverage that lasts a lifetime. Universal life insurance is popular for its affordability, compared to other permanent life insurance options, as well as for its adjustable benefits and cash value component.
Whole life insurance is a slightly more expensive type of a permanent life insurance policy that provides fixed premiums throughout the life of the policy, and coverage lasts until you die.
All permanent life insurance policies provide coverage for a lifetime. These policies also offer flexibility on premium payments and adjustments to policy terms. Many people opt for universal life because it has a cash value component that accumulates throughout the entire life of the policy. If you miss a payment, the cash value can step in and keep your policy active.
Mortgage Protection Insurance
Mortgage protection is a type of term life insurance designed to cover your mortgage payments if you pass away while the policy is in force. For many people, their home is their most valuable asset, so this insurance ensures that their loved ones could stay in the home rather than face a financial hardship if the primary breadwinner was no longer around to help pay the bills. Many mortgage protection policies also offer coverage if the homeowner becomes disabled or receives a critical illness diagnosis.
We are here to help you find the best-fit plan for your life. Get a free quote for mortgage protection insurance today and apply online in 10 minutes.
Debt Free Life®
Debt Free Life is a permanent life insurance policy that utilizes the policy’s cash value to pay off debts. Within an average of nine years or less, your debts will be eliminated. Your Quility insurance licensed agent will provide you with a customized debt payoff plan, including a timeline for when each of your debts will be paid off in full, and how much money you’ll have in retirement savings by the time your debt is paid off. Even more, you will be able to see how much money you’ll save over the years by not paying interest to lenders. Debt Free Life is a type of permanent life insurance, so you will go through the process of qualifying for life insurance coverage and maintaining premium payments to keep your policy in force. Since you are using the cash value of your life insurance policy, you won’t be spending any additional money each month to pay off your debts.
Retirement Solutions - Annuities
Annuities are popular retirement savings vehicles that offer accumulation potential and provide financial security that you can turn into an income stream during your retirement years. If you have maxed out a 401(k) or other retirement savings vehicle, an annuity can provide tax-deferred growth potential and guarantees, making it a secure option for enhanced returns later in life.
Benefits of Annuities
Critical Illness Insurance
Protecting your future is important, and with life’s uncertainties, protecting against a work-related disability or a critical illness diagnosis can provide peace of mind and financial security for your loved ones. Critical illness insurance pays a lump sum benefit if you are diagnosed with a condition listed in the policy terms. You get to choose how you spend the money: it can cover medical expenses, exploratory treatments, make up for lost income and more.
Disability Insurance
There are many reasons why you might need disability insurance. It can cover workplace injuries, disability claims and even pregnancy. Many people think of it as “paycheck protection” because it can cover your income if you are unable to work due to a short-term or long-term disability. You can use disability claim benefits to pay your mortgage or rent, cover medical expenses, pay monthly bills and more.
Final Expense Insurance
Life Insurance Riders
When you choose a life insurance policy, you will have the choice to customize your coverage with add-ons called riders. Life insurance riders can help you safeguard your income in the event of illness or disability, cover long-term care costs or provide a cash-back refund if your policy goes unused.
Accelerated Benefit Riders
Return of Premium Rider
Cash Value Policies
Cash Value Life Insurance
Not to be confused with a cash-back rider or return of premium, cash value insurance is a type of permanent life insurance. Each month, an amount of your premium goes towards a savings account within your policy, and that cash value grows tax-deferred for as long as your policy is active. If one of your goals is to save for retirement, cash value insurance could be a great fit. The only catch with cash value is that withdrawing funds from the cash value component of the policy affects the amount of the death benefit.
If you’re interested in using cash value to pay off debts from credit cards, auto loans, student loans or a mortgage, learn how our Debt Free Life program can help you become completely debt free in less than nine years by harnessing the power of cash value insurance.
Life Insurance Beneficiaries
How do you choose a beneficiary for your life insurance policy?
A beneficiary is the person who will receive the payout of your life insurance policy when you pass away. With this designation comes a lot of responsibility, so it is important to choose someone who you trust to make the best decisions and ensure your wishes are met.
Most people in committed relationships will choose their spouse or significant other as their beneficiary. You may also name a secondary (contingent) beneficiary on your policy who will inherit the death benefit if your primary beneficiary dies. For example, you might choose that your spouse receives 100% of the death benefit, and then 50% would go to your son and 50% to your daughter. Your Quility insurance licensed agent is always available to help you designate beneficiaries if you have any questions along the way.
Read more about discussing end-of-life plans and determining if a loved one is insured in this article.
How does a beneficiary receive the death benefit payout?
How do you find out if you are a beneficiary on a life insurance policy?
In most cases, your loved one would inform you that you are their chosen beneficiary. If not, you might need to look for your loved one’s insurance documents. An old policy statement or bill might list out the beneficiary. You can also reach out to the insurer to find out if the policy was in force. Insurance companies are usually not obligated to reach out to beneficiaries, so it will be up to you to determine if your loved one had a life insurance policy in which you were a named beneficiary.
To avoid the emotional stress of tracking down beneficiary information, it’s best to have these conversations with your loved ones before it’s too late.
Prices of Life Insurance
How much does life insurance cost?
What is a life insurance premium?
Are life insurance premiums tax deductible?
Life Insurance Approval Rates
How long does it take to get approved for life insurance?
Can you get life insurance if you have a pre-existing medical condition?
I have diabetes - will I get approved for life insurance?
Can I use life insurance to pay for long-term care?
In some cases, you can use life insurance to pay for long-term care. Some life insurance policies allow you to access accelerated death benefits that cover long-term care expenses under certain circumstances. Additionally, there are standalone long-term care insurance policies available that can help you gain financial protection. Life settlement options might also be available. These circumstances vary by insurance company, but your Quility licensed agent is always here to provide answers — reach out to us today if you want to learn more about long-term care options.
Life Insurance Companies
