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You are probably aware life insurance can be a wise decision. But for many, life insurance may not seem like an urgent need.
It’s important to understand how life insurance can benefit you — no matter your age. Get started now with Benzinga’s guide to who needs life insurance.
Who Needs Life Insurance?
The truth is that people in any life stage can benefit from life insurance. If you are married, it’s a good idea to have life insurance to give your partner financial peace of mind if you pass away.
If you have children or other dependents, a life insurance policy can provide for them after you’re gone. Even if you don’t have a spouse or children, life insurance might be a good idea if you have debts that would be left to your parents or other family members if you passed away.
Life insurance can even be a good idea for children and businesses. Parents can purchase life insurance policies for their children to give them a policy that will grow with them throughout their lives. Businesses may want life insurance to help give peace of mind to business partners, employees and family members.
Types of Life Insurance
There are several different types of life insurance, and each offers different benefits. Here is a quick breakdown of the policy types available from most providers.
Term Life
Term life insurance is typically the most affordable life insurance option. It provides protection for a stated period of time, known as the term of the policy. Term life insurance is usually available in terms of anywhere between 10 and 30 years.
Some insurers allow term life insurance customers to convert the policy to a permanent life insurance policy later. Other insurers will require you to purchase a new term life insurance policy if you want to continue coverage after your term ends.
Whole Life
Whole life insurance is a type of permanent life insurance, meaning that it can cover you for the duration of your life. It combines life insurance coverage with a cash value investment account.
These types of policies offer a guaranteed minimum rate of return on the cash value of the policy as well as a guarantee that the death benefit won’t decrease. Premiums of whole life insurance policies remain the same throughout the lifetime of the policy.
Universal Life
Universal life insurance is also a form of permanent life insurance. These policies can come with a cash value component, which you can withdraw money from if you need to in exchange for reducing the payout to your beneficiaries.
Some insurers offer joint universal life insurance and survivorship universal life insurance, which can offer coverage for two people on the same policy.
Variable Life
Variable life insurance offers lifetime life insurance coverage in addition to other benefits, including a variety of investment options. These flexible options can give you the potential to earn a higher rate on your cash value accumulation. You can also use the policy to build additional savings for retirement.
Simplified Issue Life
Simplified issue life insurance is a policy that can provide a limited amount of coverage quickly. With these policies, there’s no requirement for a full medical exam, so you don’t have to go through the typical waiting period that comes with conventionally underwritten policies.
The trade-off is that the premiums for these policies are often higher than a typical term life or whole life policy.
Guaranteed Issue Life
Guaranteed issue life insurance can be an option for people with health conditions that may prevent them from getting other forms of life insurance. These policies provide lifetime coverage with no medical exam or health requirements to deal with.
However, some insurers may have other requirements, such as age limits. Guaranteed issue policies usually have higher premiums and lower coverage limits than other forms of life insurance. It also typically has a graded period of 2 to 3 years.
If you have a guaranteed issue policy and pass away within the graded period, the insurer may not pay out the entire death benefit to your beneficiary. Instead, the beneficiary would probably see a return on the premiums you’ve paid along with some interest. Once the graded period is over, beneficiaries are eligible for the full payout.
Group Life Insurance
Group life insurance is life insurance that is designed to cover multiple people with one contract. It is most often offered as a company benefit. In these cases, the employer holds the contract and offers coverage to employees as a benefit. Several options can be offered as group life insurance, including term life insurance and universal life insurance.
Can Businesses Purchase Life Insurance?
Yes, businesses can purchase life insurance for a variety of uses. The main way businesses use life insurance is as an employee benefit through group life insurance.
Businesses can also purchase life insurance specifically to provide additional benefits to key employees. For example, company executives usually have higher incomes and may require a larger amount of coverage than a traditional group life insurance policy provides.
Businesses can also use life insurance to protect the needs of the business. With a whole life insurance policy, a business owner can borrow against the cash value to provide supplemental cash flow or to cover overhead expenses.
Life insurance policies can be used to offer protection if one of the owners of a company passes away. In these cases, a business can use the death benefits of a life insurance policy to purchase the deceased partner’s shares from their estate.
For family-owned businesses, a life insurance policy can be used as part of an estate plan to provide a death benefit to family members who are not involved with the business. This can help ease tensions by providing a benefit that is equal to the value of company ownership.
Compare Life Insurance
No matter what you need life insurance for, it’s important to consider your options to choose the policy that will benefit your family the most. Each insurer offers its own set of policies and benefits, so be sure to take your time to explore and compare each insurer and its policies.
Benzinga can help you simplify this process with reviews and insights on the top insurers for life insurance products.
- Best For:Those Under 50 Years OldVIEW PROS & CONS:securely through Wysh Life Insurance's website
- Best For:Adjustable coverageVIEW PROS & CONS:securely through Ladder Life Insurance's website
- Best For:Young familiesVIEW PROS & CONS:securely through Fabric Life Insurance's website
- Best For:Term life insuranceVIEW PROS & CONS:securely through Bestow Life Insurance's website
- Best For:People with healthy lifestylesVIEW PROS & CONS:securely through Sproutt Life's website
Find a Life Insurance Policy Today
After you’ve determined what your needs are, it’s time to start shopping for life insurance. Benzinga is here to help you every step of the way, from company reviews to quotes and beyond.
Frequently Asked Questions
Who most likely needs life insurance?
Anyone who has someone who is financially dependent on them likely could use life insurance. If you have a spouse or child, they most likely depend on your income to help pay the bills, even if you’re not the only person bringing money into the household.
However, this isn’t the only case in which someone may depend on you financially. If you have an aging parent or siblings who need financial support, life insurance could benefit them as well.
Is life insurance necessary for everyone?
No, life insurance is not necessary for everyone. However, most people can certainly benefit from carrying a life insurance policy. The obvious benefits are that it can provide a death benefit to your loved ones if you pass away.
But there are other ways that you can also personally benefit from a life insurance policy. If you have a form of permanent life insurance, you may be able to benefit from the cash value component if you are ever in a bind and need to withdraw or take a loan from it.
Some policies also offer additional riders that can enhance the benefits of a life insurance policy. This includes an accelerated death benefit rider, which can allow the insured person to access some of the death benefit of the policy if they are diagnosed with a terminal illness.
Some insurers may also offer a critical illness rider, which works similarly and can allow the insured person to receive a portion of the death benefit if diagnosed with a qualifying illness.
Methodology
Benzinga crafted a specific methodology to rank life insurance. To see a comprehensive breakdown of our methodology, please visit our Life Insurance Methodology page.
About Ashley Hart
Ashley Hart is a personal finance writer passionate about helping people feel empowered to take control of their finances. She has more than eight years of writing experience, focused on insurance.