Life Insurance Benefits: Everything You Need To Know

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August 18, 2023 | Johanna Karlsson

HealthPlusLife Can Help Make Sure You’re Covered

People often wonder: Why do I need life insurance? Maybe it’s better to not think about it in those terms at all. The question really should be, why do your loved ones need you to have life insurance? The answer is simple but important — it’s a crucial way to make sure they’ll be financially secure after you’re gone. The hard part is wading through the many different options out there for life insurance policies, each with its own exclusions, terms of coverage, and benefits and drawbacks. Luckily, you don’t have to figure this out alone.

The HealthPlusLife team is ready to help you figure out your options, tailoring your coverage to the exact benefits you need while also helping you find a policy that fits into your budget while considering things like your age, health condition, habits, and family status. We’ll make this complex subject simple and help you ensure that you’re getting the right coverage that your loved ones need. Let’s explore the different types of life insurance first before we get into some general tips to help you make these important decisions.

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First, What are the Types of Life Insurance?

Life insurance isn’t just one thing — there are many options, terms, and conditions to choose from, not to mention types of policies. It’s worth taking some time to understand the differences between these different products because each type has been designed to cater to specific needs and stages of life. If you’re wondering why do I need life insurance, well, the answer will depend on what your current needs and family situation is like, as well as a whole host of other factors that you’ll want to think through before making any decisions. Let’s summarize the main types of life insurance you might be considering or want to consider:

  • Term Life Insurance: Often considered the simplest form, term life insurance provides coverage for a specific period — usually 10, 20, or 30 years. If the policyholder passes away within this term, the beneficiaries receive the death benefit. Its straightforward nature often makes it a favored choice for those seeking short-term but substantial coverage.
  • Whole Life Insurance: This is a permanent form of life insurance, offering both a death benefit and a cash value component, which can grow over time. With guaranteed benefits, premiums, and cash value growth, it’s a robust option for those looking at life insurance as both protection and investment.
  • Universal Life Insurance: Another permanent policy, universal life offers more flexibility than whole life insurance. Policyholders can adjust premiums and death benefits, and it also has a cash value component that can be invested, offering the potential for higher returns.
  • Variable Life Insurance: Blending insurance with investment opportunities, variable life lets policyholders invest the cash value in various sub-accounts, similar to mutual funds. This type offers both potential for growth and the risk of decline based on market performance.
  • Indexed Universal Life: A subset of universal life, this type’s cash value growth is linked to a stock market index, offering a balance between growth potential and risk mitigation with guaranteed minimum interest rates.
  • Final Expense Insurance: Specifically designed to cover funeral expenses and other end-of-life costs, this type is a boon for those who want to ensure their loved ones don’t bear these financial burdens.
  • Group Life Insurance: Often provided by employers, group life insurance covers multiple people under one contract. It’s a valuable perk but might not be exhaustive in coverage, making personal policies a complementary necessity.

What Are the Benefits of Life Insurance in 2023?

Why do I need life insurance? Well, the answer is going to depend on you — your age, your family situation, your employment, and so many other factors. There’s not really an easy universal answer that applies to everyone. But there are some standard benefits of life insurance that are important to keep in mind if you’re wondering why you should get a policy or to make sure you’re getting the right level of coverage for your individual circumstances.

Let’s explore some of the big categories of benefits that often make life insurance an invaluable investment for you and your loved ones.

  • Financial Security and Peace of Mind: Life can be unpredictable, but with HealthPlusLife by your side, securing your family’s financial future doesn’t have to be. We believe that peace of mind isn’t a luxury — it’s a necessity. When you invest in life insurance, you’re not just buying a policy; you’re buying assurance for life’s uncertainties.
  • Protecting Your Loved Ones: The heart of any life insurance is the promise of safeguarding those you cherish the most. HealthPlusLife ensures that your family remains shielded from unforeseen financial challenges, allowing them to grieve, remember, and move forward without the weight of economic burdens.
  • Ensuring They Have the Means to Cope Financially: Beyond the emotional toll, the loss of a breadwinner can strain a family’s financial stability. Our tailored policies ensure that your loved ones can maintain their standard of living, tackle any debts, and plan a future without compromise.
  • Life Insurance as a Long-term Investment: While the protective aspect of life insurance is clear, many don’t realize its potential as a solid investment vehicle. HealthPlusLife is always here to help you explore your options and make sure you’re getting the right policy for your needs.
  • Cash Value Policies: Certain life insurance types, like whole and universal life, come with a cash value component. This is not just a policy — it’s an asset that grows over time, contributing to your financial portfolio.
  • Financial Growth and Tax Advantages: The cash value in life insurance often grows tax-deferred. This means you won’t pay taxes on any earnings as long as they remain in the policy. Plus, when approached strategically, withdrawals and loans can be managed to mitigate tax implications.
  • Covering Essential Expenses: Life insurance isn’t just about leaving behind a legacy—it’s about addressing the tangible financial needs that arise in one’s absence.
  • Funeral Costs: The final farewell shouldn’t be marred by financial concerns. Our policies ensure that funeral expenses, which can be significant, are well-covered, allowing for a dignified goodbye.
  • Mortgage and Debts: Working with HealthPlusLife to get the right life insurance coverage can help ensure that your family’s home remains theirs. With the right coverage, mortgages, loans, and other debts won’t be a burden on your loved ones.
  • Children’s Education: Every parent dreams of seeing their child graduate. Our policies can be structured to secure your child’s educational future, making dreams a tangible reality.

Benefits of Life Insurance for Business Owners

Entrepreneurs, take note. Life insurance is a critically important tool not just for family protection but also for business stability. Here are two main benefits to consider:

  • Key Person Insurance: Every business has indispensable individuals. Key person insurance ensures that the sudden loss of such a vital member doesn’t shake the company’s financial foundation.
  • Buy-Sell Agreement Coverage: Imagine a business partner passing away. How does the business transition? A buy-sell agreement funded by life insurance provides clarity, ensuring smooth operations and transitions.

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Things to Consider When Choosing or Changing Life Insurance Policies

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When you’re getting ready to sign up for a life insurance policy or are thinking about changing policies, you’ll want to make sure you’re going to be covered for all of life’s changing circumstances. If you get married or have a child, for example, your coverage needs and desire for protection for those you leave behind will likely change. Buying a home or changing careers, too, can warrant a review of your life insurance coverage to make sure everything is covered in the event of your death. That’s why it’s crucial to do your homework before choosing a life insurance policy, and don’t forget to regularly review your needs and make changes if that makes sense in your case.

Beyond just the total death benefit amount and length of terms for coverage, you’ll want to also make sure you’re balancing your need for life insurance with the regular cost you’ll have to pay in the form of premiums. At its most basic, there are three main factors that will influence life insurance premiums — age, health condition, and lifestyle choices. However, there are other things that could determine how much life insurance will cost you. Let’s dive into those components that affect the price you’ll pay for coverage:

  1. Age: Generally, younger people will have lower premiums since they often represent a lower risk for insurance companies.
  2. Health Condition: Insurance providers will consider past and present health conditions, such as chronic illnesses, recent surgeries, or a history of serious health concerns.
  3. Lifestyle Choices: Certain habits, such as smoking, drug use, or excessive alcohol consumption typically lead to higher premiums due to the impact on a person’s health.
  4. Gender: Women tend to live longer than men, which is why women will often have slightly lower premiums.
  5. Occupation and Hobbies: If you enjoy or do high-risk things — think things like skydiving, mining, or deep-sea diving — your premiums will likely be higher.
  6. Policy Type: The kind of life insurance you choose — term life, whole life, or universal life — will factor into your premiums.
  7. Coverage Amount: Higher death benefits come with higher premiums.
  8. Family Medical History: Even if you’re in perfect health, a family history of certain genetic conditions might affect your premium.
  9. Frequency of Payment: Sometimes, paying in larger lump sums, such as quarterly or annually, can offer savings on your premium.
  10. Policy Riders: Additional features or riders — accidental death benefits or long-care provisions, for example — can affect a premium.
  11. Duration of Coverage: Especially in the case of term insurance, the longer your policy term, the higher the premium could be.

How to Choose the Right Coverage for Life Insurance?

Now that you understand the different types of life insurance policies and have a better grasp on the factors that can influence your premiums, it’s good to know that you don’t have to make this important decision alone. Consult with professionals, such as the expert agents with HealthPlusLife, to go through your options, consider different coverage terms and amounts that will affect your premium cost, and make sure your loved ones will be protected and financially secure when you’re gone.

If you’re still wondering why do I need life insurance, remember that this is an investment in your family or business — and it’s a crucial way to make sure they’re going to be OK for decades to come. It’s worth investing in that kind of financial and emotional peace of mind. Give our team at HealthPlusLife a call today at 888-828-5064 and make sure you’re getting the right kind of life insurance coverage for your individual circumstances. We’d be happy to help.

FAQs About the Need for Life Insurance

What exactly is life insurance?

Life insurance is a contract between an individual and an insurance provider, wherein the provider promises to pay a specified amount to beneficiaries upon the death of the policyholder, in exchange for regular premium payments.

Isn’t life insurance just for older people?

No, life insurance is for individuals of all ages. Many people start policies when they’re younger to lock in lower premium rates and to ensure financial protection for their families from unexpected events.

If I’m single and have no dependents, do I still need life insurance?

While those with dependents often prioritize life insurance, single individuals can also benefit. A policy can cover funeral expenses, personal debts, or leave a financial legacy. Starting early also means more affordable premiums.

How does life insurance differ from health or disability insurance?

While life insurance provides financial support after the policyholder’s death, health insurance covers medical expenses, and disability insurance provides income replacement if one is unable to work due to illness or injury.

How much life insurance do I actually need?

The amount varies based on individual circumstances. It’s wise to consider factors like current debts, monthly expenses, future family needs, and potential education costs when deciding on coverage.

Are there different types of life insurance policies? Which is best for me?

Yes, there are primarily term life and permanent life insurance policies. Term life covers you for a specific period, while permanent life lasts your entire lifetime. Your choice depends on your financial goals, coverage needs, and budget.

Is life insurance expensive?

The cost varies based on the type of policy, age, health, and other factors. Starting early often results in lower premiums. It’s best to get quotes and consult with professionals like the team at HealthPlusLife to understand your options.

Can I get life insurance if I have a pre-existing health condition?

Yes, but it may affect your premiums or policy terms. Insurers assess risk based on health conditions. Some policies might be more suitable for those with specific health concerns.

Do I still need life insurance if I have a similar benefit at work?

Employer-sponsored life insurance is a great benefit, but it might not offer the coverage amount you need. Plus, if you change jobs, you might lose that coverage. Personal policies ensure continuous protection.

What happens to my life insurance policy if I outlive the term?

For term life insurance, the policy expires. You might have options to renew or convert it to a permanent policy, but terms and premiums could change.

Can I change or update my life insurance policy as my life circumstances change?

Most policies offer some flexibility in terms of adjustments. It’s essential to review your coverage regularly and consult with your insurance provider about changes.

Are the payouts from life insurance policies taxed?

Generally, life insurance death benefits are not considered taxable income for the beneficiary. However, some aspects, like interest or cash value withdrawals, may have tax implications. Always consult with a tax professional.

Can I use my life insurance policy as an investment or savings tool?

Certain policies, like whole or universal life, have a cash value component that can grow over time and be used for investment or savings purposes.

What’s the difference between a beneficiary and a policyholder?

A policyholder owns the life insurance policy and pays the premiums, while a beneficiary is the person or entity designated to receive the death benefit upon the policyholder’s death.

How do I know I’m choosing a trustworthy and reliable insurance company?

Research the company’s financial stability, customer reviews, and industry ratings. Consultation with independent financial advisors or experts can also provide insights.

Johanna Karlsson
Johanna Karlsson is a veteran health and life insurance professional licensed in 50 states. She relocated from the countryside in the south of Sweden and has not looked back. After coming to the United States to attend university, she gained her degree in Public Relations. She brought her public relations skills to a local international health insurance where she discovered a new passion in insurance. After years with that company, Johanna now joins HealthPlusLife to help build a team of licensed insurance agents ready to meet your insurance needs.