Understanding Life Insurance

What is life insurance? Why might it be needed?

Life insurance can provide financial support to designated beneficiaries after your death. Life insurance also can provide money to help pay for outstanding expenses. This includes things such as mortgages, loans, and funeral costs. There may be other reasons to consider life insurance as well.

How much life insurance is needed?

There is no single answer when it comes to determining life insurance needs. Every person and situation is different—that's why it's important to compare different policies and premiums.

Many Web sites have online tools that can help you estimate your coverage needs. Another way to determine coverage is to speak with a life insurance representative directly. He or she may be able to help guide you when it comes to making decisions about life insurance.

Before making decisions about which policies, if any, to purchase, be sure to:

  • Thoroughly research policies
  • Review the coverage
  • Compare policy options

Download complete insurance quick reference [PDF 6 pages, 183k] including the health insurance options information on this page.

Ways to obtain life insurance

There are 2 ways to obtain life insurance: through a group or individually.

  1. Group life insurance
    Group life insurance is purchased through a group such as an employer, union, or organization. Group life insurance tends to be less expensive than individual life insurance because of group rates.
  2. Individual life insurance
    Individual life insurance is purchased through a private insurance company.

Types of life insurance policies

There are 2 types of life insurance policies: term and permanent.

  1. Term life insurance
    Term life insurance covers a person for a specific amount of time, or "term." Term policies will pay benefits only if the person dies during the term of the policy.
  2. Permanent life insurance
    As long as payments are made on time, permanent life insurance covers a person permanently until death. Permanent life insurance may provide a savings feature that builds in value, allowing you to take out money. Permanent life insurance tends to be more expensive than term insurance.

Which type of life insurance is best?

When deciding between term and permanent life insurance, there are a lot of factors to consider. To help determine which type of coverage might benefit you, you may want to talk to an insurance agent directly.

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