Life insur­ance blah blah blah. Is that what you hear when some­one men­tions it as part of your new job’s employ­ee ben­e­fits round-up or when you see some­thing about it on TV or social media? Not to wor­ry: we’ve got the low-down on what you need to know. And it’s real­ly not as over­whelm­ing (or under­whelm­ing) as you might think.

1. It’s part of a sound finan­cial plan. You know about sav­ings, you know about retire­ment. You might know a bit about invest­ments and long-term finan­cial plan­ning for your health and hap­pi­ness. And life insur­ance helps with plan­ning for your loved ones’ long-term health and hap­pi­ness, espe­cial­ly those who depend on your income, in case some­thing were to hap­pen to you.

2. There are dif­fer­ent kinds of life insur­ance. In addi­tion to employ­ment-based life insur­ance (which typ­i­cal­ly only lasts as long as your employ­ment at your job), there’s term and per­ma­nent life insurance.

Term life insur­ance: You typ­i­cal­ly pay low­er pre­mi­ums for term life insur­ance, but your cov­er­age is just for a spec­i­fied amount of time, say 20 years, for exam­ple. At the end of the term, your insur­ance cov­er­age ends.

Per­ma­nent life insur­ance: With per­ma­nent life insur­ance (whole, uni­ver­sal, vari­able) you typ­i­cal­ly pay high­er pre­mi­ums in the short term, but then these poli­cies gen­er­al­ly allow you to accu­mu­late cash val­ue over time. Your cov­er­age is designed to last as long as you con­tin­ue to pay premiums.

3. Life insur­ance is sur­pris­ing­ly afford­able for most peo­ple. Sure, there are forms of life insur­ance that get prici­er the more fea­tures you add on to it, and the price goes up if you’re a smok­er or deal­ing with health prob­lems. But most peo­ple think life insur­ance costs about three times as much as it real­ly does, accord­ing to the Insur­ance Barom­e­ter Study by Life Hap­pens and LIMRA. Just as a gen­er­al guide, a healthy non­smok­ing 30-year-old man can get a $250,000 20-year lev­el term pol­i­cy for about $16 a month.

4. Key life events are often the best time to get on board. Get­ting mar­ried? Hav­ing kids? Chang­ing jobs? Bought a house? Sig­nif­i­cant life events are often the time you become most aware of the need for life insurance—and on that note…

5. You can change your life insur­ance. Per­haps you have a life insur­ance pol­i­cy that your par­ents got for you when you were a baby. Per­haps you have a term pol­i­cy from when you bought your house but now you have a big­ger fam­i­ly and you’re con­cerned about get­ting them all through col­lege. Or per­haps you want to bump up your cov­er­age because your over­all cost of liv­ing has changed. And on *that* note …

6. You may well need more cov­er­age than you think. Some­times peo­ple think life insur­ance is to pay off their own debts and funer­al expens­es. But a key advan­tage of hav­ing life insur­ance is to ensure that the peo­ple who depend on you will be OK with their ongo­ing and future finan­cial needs if some­thing hap­pens to you. Need help fig­ur­ing this out how much? Go to this online cal­cu­la­tor:

7. Life insur­ance pays out quick­ly. Because life insur­ance doesn’t get tan­gled up in estate claims, it gen­er­al­ly pays out quick­ly, some­times in days or weeks, usu­al­ly inside of a month.

8. Life insur­ance pro­ceeds are gen­er­al­ly tax-free. Com­pare this to, say, crowd­fund­ing options like “GoFundMe” that have become so pop­u­lar yet cre­ate tax con­se­quences for the peo­ple they’re meant to help (to say noth­ing of fees and the lack of guar­an­teed ben­e­fit). It’s also help­ful when you’re try­ing to cre­ate an inher­i­tance for a beneficiary.

9. Life insur­ance pro­tects your fam­i­ly, but only if you let it. Keep your pre­mi­ums paid up and your ben­e­fi­cia­ries up to date, and the door with your agent open so that your loved ones know who to call if they need to. Keep your paper­work with your oth­er vital documents.

10. Life insur­ance can be more than just life insur­ance. Using “rid­ers,” or an adden­dum to a life insur­ance con­tract, or even a spe­cif­ic kind of pol­i­cy, life insur­ance ben­e­fits can become “liv­ing ben­e­fits,” mon­ey you can access before you die, or use to pay for long-term care, as two examples.

If you still need help get­ting a han­dle on all this, talk to an agent. They can help you under­stand the ins and outs and the best pol­i­cy for your bud­get and needs. Because of course—the most impor­tant thing to know about life insur­ance is that it’s there to help the peo­ple you love the most.

By Helen Mosher

Orig­i­nal­ly post­ed on