The policyholder pays a monthly cost, called the premium, to keep the life insurance policy active. If the policyholder dies, their beneficiaries receive a cash payout, called the death benefit. Whole life insurance lasts for as long as you pay premiums, while term life insurance expires after a set number of years.
Life insurance cost depends largely on your age, your health, the benefit amount, and the term length. A healthy 35-year-old male can buy a $500,000, 20-year policy for around $26 a month.
Whole life insurance is 6-10 times more expensive than a comparable term policy. Life insurance rates increase by an average of 8-10% each year you put off buying a policy.
Anyone who is the primary breadwinner and has people who depend on them financially should consider life insurance.
This includes parents, spouses, and even children who have student loan debts co-signed by their parents. Think about costs like everday bills, mortgages, retirement savings, and credit card debt that would need to be accounted for if you were no longer around.
Entrepreneurs should also consider life insurance to help business partners support the company or allow their family to buy out their shares.
Older people without any dependents, or young children who don't provide financial support, likely don't need life insurance.
The two main types of life insurance are term and whole.
Term life insurance expires at the end of the term, making it an affordable option that protects you when you need it most.
Whole life insurance is a type of permanent life insurance that lasts as long as you pay for it. It has an investment-like cash value, but is 6-10 times more expensive than term life.
Other types of permanent life insurance include universal, variable, and guaranteed.
Life insurance provides peace of mind for you and your family. Term life insurance is an affordable form of financial protection, costing as little as $20-$25 a month for some people.
The death benefit is usually tax-free, so your family gets the entire amount.
Life insurance can be purchased online, and the entire benefit amount is available as soon as the policy is active - no waiting period.