Every life insurance policy is unique, and every state has a different set of rules.  You should seek the advice of a life insurance expert before buying a policy.

Life Insurance Plans

Most individuals will explain life insurance to you as a policy you purchase that provides money to your family in the event of your death. If you ask them to describe the main aspects of the policies, the many options, or how they operate, they will likely try to divert the subject.

However, those factors are important if you’re looking into life insurance. Your inquiries will be addressed in this post, specifically:

  • What are the key features of a life insurance policy?
  • How do various types of life insurance policies work?
  • What are the advantages of life insurance at various ages?

What is a life insurance policy, and what are its key features?

A life insurance policy is an agreement between a person and an insurance provider (or legal entity). Every life insurance policy is unique, and every state has a different set of rules that govern insurance contracts. The majority of insurance policies typically list the following:

  • The insurer: State insurance departments oversee only a select group of businesses that are permitted to offer life insurance.
  • The policyholder.The person or organization that owns (or “holds” the policy is referred to as the policyholder. Examples include a family trust or a company. The policy has two options for coverage: either the holder or a third party.
  • The insured.The individual whose life is insured.
  • The death benefits.The sum that the insurer will pay after the insured dies.
  • The beneficiaries. The recipients of the death benefit are known as beneficiaries. It can be distributed proportionally among many different persons and entities (for example, three children could each receive 30% and 10% could go to a charity), or it can all go to a single person (for example, the surviving spouse).
  • The policy length.The duration of time the insurer agrees to provide a death benefit.This can be for a set period of time, like 10 or 20 years, or it can be permanent, meaning that as long as premiums are paid, the policy will be in effect for the insured’s whole lifetime.
  • The premium.The monthly or yearly payments required to maintain the insurance in effect.
  • The cash value: Whole life insurance and permanent life insurance both feature a cash value component that accumulates over time and can be withdrawn or used as collateral for loans. Term life insurance has no cash value.

Types of Life Insurance

Term Life Insurance

Term life insurance offers protection for a predetermined amount of time, usually between 10 and 30 years. It is sometimes referred to as “pure life insurance” because, unlike permanent policies or whole life insurance, the policy has no cash value component. 

It is mainly a good choice for your family in earlier years when the need is the greatest. It’s also very affordable for a high level of coverage or face amount. This may make sense if you have a young family and if the budget is tight. It provides protection for a specific period of time; and mainly pays a benefit only if you die during the term. This type of insurance makes sense when you have a need for coverage that may disappear at a specific point in time; like college education for your kids and mortgage.

Permanent Life Insurance

Permanent life insurance offers protection for the duration of your life. Unlike term, it is not a “pure life insurance” product because it also has a cash value element that extends coverage while the insured is still living and paying premiums.  Over time, a portion of your premium payments grow tax-deferred, but the entire death benefit is paid out right away on the first day you own the policy. On the other side, it can take some time for the cash worth to increase to a sizeable sum.

In this case, your life insurance policy remains in effect for as long as you are alive and as long as you make all required payments. Regardless of when you pass away, your beneficiaries—whether close family members or a chosen charity—will receive a certain amount of money.

Types of Permanent Life Insurance

Whole Life Insurance

A whole life insurance coverage often works best for the kind of person who values security. Because of the guarantees it offers, whole life insurance policies usually start out more expensive.

You are purchasing a financial product with a number of assurances that will come with an immediate death benefit and begin growing into a permanent asset. These include guaranteed level premium payments, which ensure that the monthly (or annual, as you wish) payments you make won’t ever increase. You may be confident that your whole life insurance premium will be constant each month and won’t increase as living expenses rise in the years to come.

Universal Life Insurance

The increase of the cash value of a universal life insurance policy is based on the current interest rates applicable to that particular type of policy. All universal life insurance policies will have various growth patterns. The amount of premium you pay into the policy and the amount you withdraw from the cash value will both affect how much the policy grows overall.

With universal life, there is some risk because your policy may be affected by shifting interest crediting rates, insurance premium costs, and investment performance. It is crucial to take into account coverage with a business that provides a guaranteed interest rate.

What benefits do people get from life insurance?

You can have long-lasting piece of mind knowing that you have left a legacy thanks to life insurance. Of course, you must commit over a long period of time to paying premiums and maintaining the policy in force. Among the most popular reasons for purchasing life insurance are:

  1. Guaranteed protection  – The life insurance benefit of a whole life policy serves as a safety net for your finances if you have a family, a business, or other people who depend on you. Your beneficiaries will be given a lump sum that is promised to be paid in full when you pass away (provided all premiums are paid and there are no outstanding loans). It is crucial protection to know that you can rely on your loved ones to be there for you in times of need.
  2. Income replacement – Just about what would happen to your family if you were to suddenly lose your source of income. By purchasing whole life insurance, you can ensure that your loved ones have the resources necessary to:
    • Mortgage payment 
    • Afford childcare, health care, or other services
    • Pay for tuition and other college costs 
    • Get rid of personal debt 
    • Keep a family company going
  3. Tax-free benefit  – Every amount you leave your beneficiaries will be theirs to keep and enjoy. This is due to the fact that a life insurance policy’s benefit is often transferred federal income tax-free.
  4. Guaranteed cash value growth – Your Whole Life policy’s cash value grows tax-deferred while you pay your premiums, and it can help you achieve a range of financial objectives: 
    • Additional retirement income 
    • Pay for the education of a child or grandchild. 
    • Pay off a mortgage 
    • Secure existing assets 
    • Make an emergency fund.

What can affect your life insurance premiums?

It’s possible that people have a vague sense of what life insurance can cost. However, not everyone may be familiar with the various aspects that insurers take into account when calculating premiums. You can effectively manage the cost by being aware of these factors. Your premiums are influenced by your age, sex, smoking history, and general health. There are other factors you should think about in addition to how your premium fits into your budget.


Younger people typically have to pay lesser premiums. Your risk of developing a health condition increases as you age. As a result, premiums are higher when you are older. You might save money by filing a life insurance application when you're younger.


According to the World Health Organization, women live six to eight years longer than men do on average. Females may pay less for life insurance since they live longer and have more time to pay their premiums.


The insurance company normally analyzes your health as part of the underwriting process when you apply for life insurance coverage. Healthy candidates with good habits typically pay less. On the other side, you might have to pay more for coverage if you have specific medical issues.

Tobacco use

Due to the substantial health risks associated with tobacco use, life insurance firms also inquire about your use of the product. If you smoke, there's a good possibility your life insurance premiums will be higher, and this usually holds true even if you don't have any other health issues. If you decide to stop smoking after enrolling, you might be eligible to ask to go through the health underwriting process once more in order to receive a cheaper cost.

Family History

The insurance provider might inquire about your parents' and siblings' medical histories as part of the application process. If you have a history of health issues in your family, such as several family members who have diabetes, your life insurance premiums may go up because the insurer may be concerned that you might experience the same condition.

Lifestyle & Occupation

The life insurance provided may inquire about your occupation, interests, and way of life. You could have to pay higher premiums if you operate in a hazardous field to cover the added risk. This could also raise your expenses if you engage in any risky activities, such as skydiving or racing cars. The insurance provider could also look up your driving and criminal histories. If so, these can result in an increase in price or a flat-out refusal of coverage.

Keep your loved ones safe, get a life insurance quote today!

*By completing this form, you agree that an authorized representative or licensed insurance agent may contact you by phone,email,text, mail or face to face to answer your questions or provide additional information about your Medicare plan options. Not affiliated or endorsed by Medicare or any state or federal governmental agency.