Life Insurance: What It Is and Why It Matters
Life insurance is a contract between you and an insurance company. In exchange for regular premium payments, the insurer agrees to pay a tax-free lump sum (called a death benefit) to your chosen beneficiaries when you die. It’s designed to provide financial protection and peace of mind for your loved ones.
Why Life Insurance Is Important
Anytime is a good time to get life insurance but the earlier, the better. Premiums are lowest when you’re young and healthy. You should consider getting life insurance if: You have dependents (kids, spouse, elderly parents) You have debts You own a home You run a business You want to leave a legacy or cover estate taxes.
Term Life Insurance
- Coverage lasts for a set term (10, 20, 30 years)
- Pays out only if you die during the term
- Most affordable option
- Great for families with temporary needs (e.g., until kids are grown or mortgage is paid)
Whole Life Insurance
- Coverage lasts your entire lifetime
- Includes a cash value component that grows over time
- More expensive, but builds savings you can borrow from
Term Life Insurance
- Flexible version of whole life
- Lets you adjust your premiums and death benefit
- Also includes a cash value component
Final Expense Insurance (Burial Insurance)
- Smaller policy (typically $5,000–$25,000)
- Designed to cover funeral and final costs
- Easy to qualify for, even with health issues