What Is Life Insurance?

Written By : BenaVest

March 23, 2021

The Quick Answer


Life insurance is a contract between a life insurance policy holder and a policy provider that protects the holder’s beneficiaries in the event that the holder passes away. Some other advantages of life insurance are: 


  • Depending on how old and how healthy you are when you get life insurance you may pay as little as $30 a month for your coverage.
  • You can leverage life insurance to ensure that certain life events can be financially paid for even without your income. Such as paying off a mortgage or paying for your children’s school.
  • Peace of mind knowing that your family will be covered financially in the event of your passing.

Life insurance is a contract between a life insurance policy holder and a policy provider that protects the holder’s beneficiaries in the event that the holder passes away. The beneficiaries receive what is called a death benefit which is the payout provided by the provider if the policy holder has passed.


Do I need life insurance?


If you have anyone that is financially dependent on you the answer is yes. If you have just bought a new home and share the mortgage with a spouse or partner, for example, if you were to pass away your spouse may have difficulty paying the mortgage on their own. 


Another example to get life insurance is to make sure that even if you were to pass away you can put your children through school and help them move out. If you were to get something like term insurance you can get a term for 20 years. Guaranteeing that you will either be alive for those 20 years to help your children through school or if you pass away sadly, they will at least still have the financial stability to continue their school work and move out.


The idea behind life insurance is that you are covering your beneficiaries for a few years after your loss and preventing them from any bad financial situations. Any large financial obligation that you can avoid for any of your beneficiaries is a good reason to get life insurance. 


Types of life insurance


Term Life Insurance is life insurance that covers you for a certain amount of time. Anywhere from 10 to 30 years is generally how long you can buy term life insurance for. Term insurance is the most affordable option however it only covers you for the selected term. If you pass away just after your term is over, your beneficiaries will not receive a death benefit. This is a good option if you would like to ensure certain life events will happen. Such as your children having financial stability to finish school or covering the cost of a mortgage that was split with a spouse.


Whole Life Insurance covers you for life as long as you make your premium payments on time. It also grows a cash value which is what your beneficiaries collect at the event of your death. That cash value can also be leveraged to pull out loans that can help you and your beneficiaries while you are still living. However any loans that were not paid back on time while lower the total death benefit paid to your beneficiaries. This is the most expensive option because it has the potential to cover you until you pass away thus paying out no matter what and you have the ability to pull loans from it.


Universal Life Insurance is like a mix of term life insurance and whole life insurance. Universal is permanent just like whole life insurance which covers you for your whole life except you can decide how much premium you would like to pay within regulations. You may also decide whether you would like a fixed death benefit or one that can grow like whole life insurance. 


How much life insurance do I need?


Generally you can multiply the amount of income you make yearly between 5 and 10 times to get an idea of how much coverage you should get yourself. This allows ample time to allow your beneficiaries time to recover from your loss and still be within the right price range for you.


How much coverage you should get also depends on the value you provide to your family. If you do not make much yearly but you are your household’s caretaker you may want to consider the costs of services that can replace you. You may also want more coverage if you want to cover the cost of a mortgage or any other large financial obligation.


How much does life insurance cost?


Life insurance can be as little as $30 a month depending on a few things that alter that price. The younger and healthier you are when you get your life insurance policy the cheaper your monthly premium will be. As far as term life insurance goes the length of your term also determines price. Getting whole life insurance comes with many advantages at higher costs. So it all depends which life insurance is right for you.


How to get life insurance


You can easily get life insurance online at ezHealthMart. Here on ezHealthMart we have the best agent to assist you with getting the right life insurance plan that is right for you.