Solutions: all your questions answered
The basic definition of a life insurance policy is a legal agreement between you and an insurance provider. If you die while the policy is active, the beneficiary receives the premium payments you made on a regular basis. You can choose to have your policy in effect for a fixed number of years or for the rest of your life.
The frequency with which you pay your premium is up to you, but it could be monthly, semi-annually, or annually. If you keep up with your premium payments throughout the policy's term and pass away while the policy is still active, the insurance company must pay out the policy's death benefit to your beneficiaries. How your death benefit is calculated and paid is spelt out in detail in your policy, which you should review for more information.
Upon your passing, your life insurance policy's death benefit will be paid to whoever you've designated as the beneficiary. You can designate a single beneficiary or a group of people. Changing the named beneficiary on a policy is typically possible. Any questions about your coverage should be directed to the provider of that coverage.
A life insurance policy does not bind you in any way, and you can usually terminate it simply by not paying your premiums or by asking the insurance company to do so.
The frequency with which you pay your premium is up to you, but it could be monthly, semi-annually, or annually. If you keep up with your premium payments throughout the policy's term and pass away while the policy is still active, the insurance company must pay out the policy's death benefit to your beneficiaries. How your death benefit is calculated and paid is spelt out in detail in your policy, which you should review for more information.
Upon your passing, your life insurance policy's death benefit will be paid to whoever you've designated as the beneficiary. You can designate a single beneficiary or a group of people. Changing the named beneficiary on a policy is typically possible. Any questions about your coverage should be directed to the provider of that coverage.
A life insurance policy does not bind you in any way, and you can usually terminate it simply by not paying your premiums or by asking the insurance company to do so.
Finance experts say that you should have at least ten times your annual salary in savings or insurance, if not more. If you've saved enough money to cover that safety nett on your own, you might not need life insurance. If you don't have enough money saved, you can help protect the future of your family by getting a term or guaranteed-issue whole life insurance policy.
Most of our customers are either:
Parents: USA Today says that it costs about $234K to raise a child until they are an adult, and that doesn't include college tuition. A life insurance policy can help make sure that your family is financially stable after you die.
If you own a home, a mortgage is probably the biggest debt you'll ever take on. If you own a home, you should think about getting a life insurance policy that lasts as long as your mortgage so that your family doesn't get stuck in a financial situation they can't handle.
Partners: You would do anything for your partner, and that includes making sure they are taken care of if you die suddenly. Make sure to think about any joint debt, expenses, and plans for the future. Students: Your debt doesn't disappear when you die. If you had a private student loan and died, your parents or other co-signers may have to pay off your debt.
Owners of businesses: When you own a business, more people than just your family depend on you. It's smart to make sure your business can keep going even after you die.
Retires: If you're at or nearing retirement age, it's natural to worry about how you'll pay for your funeral. A whole life insurance policy can help pay for these costs and give you and your family peace of mind. What would happen to the person who depends on you, like an elderly parent or a family member with a disability, if you weren't there? You might want to think about insurance to make sure that they are taken care of.
Most of our customers are either:
Parents: USA Today says that it costs about $234K to raise a child until they are an adult, and that doesn't include college tuition. A life insurance policy can help make sure that your family is financially stable after you die.
If you own a home, a mortgage is probably the biggest debt you'll ever take on. If you own a home, you should think about getting a life insurance policy that lasts as long as your mortgage so that your family doesn't get stuck in a financial situation they can't handle.
Partners: You would do anything for your partner, and that includes making sure they are taken care of if you die suddenly. Make sure to think about any joint debt, expenses, and plans for the future. Students: Your debt doesn't disappear when you die. If you had a private student loan and died, your parents or other co-signers may have to pay off your debt.
Owners of businesses: When you own a business, more people than just your family depend on you. It's smart to make sure your business can keep going even after you die.
Retires: If you're at or nearing retirement age, it's natural to worry about how you'll pay for your funeral. A whole life insurance policy can help pay for these costs and give you and your family peace of mind. What would happen to the person who depends on you, like an elderly parent or a family member with a disability, if you weren't there? You might want to think about insurance to make sure that they are taken care of.
Rates for life insurance go up with age, so the sooner you get it, the more likely it is that your premium will be lower. If you apply soon, you can make sure you get the best rate. Life insurance is important if you just bought a house and need to pay the mortgage, if you just had a baby or plan to have one in the future, or if you want to replace your family's income in case you die too soon.
Everyone has a different experience. In general, you can find the right amount of coverage by adding up your long-term debts and subtracting your assets. The rest is the gap that needs to be filled by life insurance. It can be hard to know what to include in your calculations. To help you figure out how much coverage you need, we created a term life insurance calculator.
There are also some general rules that can help. One simple way is to multiply your annual income by 10. You can also use the DIME formula to help you figure out how much life insurance you need. Debt, income, mortgage, and education are what DIME stands for.
Total amount of money owed, or debt (student loans, credit cards, car loans, etc.) Most likely, you'll want to include funeral costs here.
Income: Multiply your annual salary by the number of years your family will need the money (e.g., until your youngest child reaches a predetermined age, such as 18, 21, or 25). For example, if you make $50,000 a year after taxes and your youngest child is 10, and you want to protect your income until he or she is 21, you would multiply $50,000 by 11 years, which would equal $550,000. If you are a stay-at-home parent, you should include how much it would cost to replace the services you provide, like child care.
Mortgage: If you have enough life insurance, your family can stay in the house. In this step, you just need to add up the amount you still owe on your mortgage. If you rent, you could add 10 years' worth of rental income to your plan instead.
Figure out how much it will cost to send your kids to college or a private school. People often say that a four-year college education at a state school will cost $100,000 per child. This includes the cost of classes, food, and books.
There are also some general rules that can help. One simple way is to multiply your annual income by 10. You can also use the DIME formula to help you figure out how much life insurance you need. Debt, income, mortgage, and education are what DIME stands for.
Total amount of money owed, or debt (student loans, credit cards, car loans, etc.) Most likely, you'll want to include funeral costs here.
Income: Multiply your annual salary by the number of years your family will need the money (e.g., until your youngest child reaches a predetermined age, such as 18, 21, or 25). For example, if you make $50,000 a year after taxes and your youngest child is 10, and you want to protect your income until he or she is 21, you would multiply $50,000 by 11 years, which would equal $550,000. If you are a stay-at-home parent, you should include how much it would cost to replace the services you provide, like child care.
Mortgage: If you have enough life insurance, your family can stay in the house. In this step, you just need to add up the amount you still owe on your mortgage. If you rent, you could add 10 years' worth of rental income to your plan instead.
Figure out how much it will cost to send your kids to college or a private school. People often say that a four-year college education at a state school will cost $100,000 per child. This includes the cost of classes, food, and books.
A beneficiary is a person or trust who is named to get the money from the policy after the insured dies. The person who is supposed to get the money from the policy sends a claim to the insurance company. You, as the owner of the policy, can choose who you want to be the beneficiary (or beneficiaries).
If you choose to have more than one beneficiary, you'll give each of them a certain amount of the death benefit so that the total of all of them adds up to 100%. For example, you could give your partner 50% and each of your two children 25%, for a total of 100%. When your death benefit is paid out, the percentage based on your allocations will be given to your beneficiaries.
You can also choose a primary beneficiary and a backup beneficiary. If your primary beneficiary is still alive when you die, they will get the death benefit. If that doesn't happen, the money will go to your contingent beneficiaries. For example, you may have named your partner as your primary beneficiary, who will get 100% of the money, and your two children as your contingent beneficiaries, who will each get 50%. If your partner dies before you, the death benefit will go to your children. You should name a backup beneficiary because it's possible that your main beneficiary could die before you do.
You can also choose a primary beneficiary and a backup beneficiary. If your primary beneficiary is still alive when you die, they will get the death benefit. If that doesn't happen, the money will go to your contingent beneficiaries. For example, you may have named your partner as your primary beneficiary, who will get 100% of the money, and your two children as your contingent beneficiaries, who will each get 50%. If your partner dies before you, the death benefit will go to your children. You should name a backup beneficiary because it's possible that your main beneficiary could die before you do.
Life insurance comes in two main types: term life insurance and permanent life insurance.
Most of the time, term life insurance is the easiest and least expensive choice. It covers your dependents for a set amount of time, or "term," usually 10 to 30 years, and is meant to protect them while you are working and making money. If you die during the term period, your beneficiaries will get the policy proceeds in one lump sum.
Permanent life insurance, like whole life insurance, covers you for the rest of your life. Some permanent life insurance policies let you get cash value through a policy loan, a withdrawal, or a partial surrender of the policy. Usually, the amount paid to beneficiaries will go down because of withdrawals, partial surrenders, and loans that are still being paid back.
Our goal is to protect as many families as possible and make sure they are safe. We can do that because we offer both term and guaranteed-issue whole life insurance.
You might want term life insurance, especially if:
You need coverage to replace your income for a set amount of time (like when you're raising kids or paying off a mortgage).
You want the cheapest coverage that gives you insurance for a certain amount of time (like while you are working and saving for retirement).
You want a quick and easy way to protect your family when they need it most (like while you are a wage earner, covering household expenses).
You might want guaranteed-issue whole life insurance, especially if:
You are between 65 and 85 years old.
You want an easy process that doesn't involve medical exams or lab tests.
You thought you couldn't get life insurance because of your age or health. You want your policy to accumulate cash value.
You want coverage for the rest of your life. You don't want your family to have to worry about your final costs.
You're willing to pay a higher premium because this coverage has unique benefits.
Most of the time, term life insurance is the easiest and least expensive choice. It covers your dependents for a set amount of time, or "term," usually 10 to 30 years, and is meant to protect them while you are working and making money. If you die during the term period, your beneficiaries will get the policy proceeds in one lump sum.
Permanent life insurance, like whole life insurance, covers you for the rest of your life. Some permanent life insurance policies let you get cash value through a policy loan, a withdrawal, or a partial surrender of the policy. Usually, the amount paid to beneficiaries will go down because of withdrawals, partial surrenders, and loans that are still being paid back.
Our goal is to protect as many families as possible and make sure they are safe. We can do that because we offer both term and guaranteed-issue whole life insurance.
You might want term life insurance, especially if:
You need coverage to replace your income for a set amount of time (like when you're raising kids or paying off a mortgage).
You want the cheapest coverage that gives you insurance for a certain amount of time (like while you are working and saving for retirement).
You want a quick and easy way to protect your family when they need it most (like while you are a wage earner, covering household expenses).
You might want guaranteed-issue whole life insurance, especially if:
You are between 65 and 85 years old.
You want an easy process that doesn't involve medical exams or lab tests.
You thought you couldn't get life insurance because of your age or health. You want your policy to accumulate cash value.
You want coverage for the rest of your life. You don't want your family to have to worry about your final costs.
You're willing to pay a higher premium because this coverage has unique benefits.
Life insurance is a way of helping your family cope financially when you die. When your family can't count on your salary or income anymore, they can use the payout to help with everyday costs. So the question of what life insurance covers can be answered in two ways: by the expenses it covers, and by the types of deaths it covers.
Costs that life insurance pays for :
Most of the time, the money from a life insurance policy is used to pay for things like home mortgages, funeral costs, children's college tuition, existing debt, child care or care for a dependent, medical bills, living expenses, co-signed debt, and any other costs that your loved ones may have. But in the end, it's up to your beneficiary (or beneficiaries) to decide what to do with the money from the policy.
Types of deaths that life insurance will pay for :
Even though each policy is different, most of them cover deaths caused by accidents and natural illnesses. Most policies will not pay out if the deceased committed suicide within the first two years of the policy. Also not covered are policies where the applicant lied on the application, as described in the policy's incontestability clause (meaning they lied on the application). Each state has its own rules about the incontestability period, but the average time is two years. If insurance fraud has been committed, the money from the policy will not be paid out. Some policies may have additional limitations or exclusions regarding the benefits paid, such as death as a result of war, aviation, or certain avocations (policies administered by Ethos do not have these additional exclusions). If you have questions about the limits or exclusions of your policy, you can look at your policy or ask your insurance company.
Costs that life insurance pays for :
Most of the time, the money from a life insurance policy is used to pay for things like home mortgages, funeral costs, children's college tuition, existing debt, child care or care for a dependent, medical bills, living expenses, co-signed debt, and any other costs that your loved ones may have. But in the end, it's up to your beneficiary (or beneficiaries) to decide what to do with the money from the policy.
Types of deaths that life insurance will pay for :
Even though each policy is different, most of them cover deaths caused by accidents and natural illnesses. Most policies will not pay out if the deceased committed suicide within the first two years of the policy. Also not covered are policies where the applicant lied on the application, as described in the policy's incontestability clause (meaning they lied on the application). Each state has its own rules about the incontestability period, but the average time is two years. If insurance fraud has been committed, the money from the policy will not be paid out. Some policies may have additional limitations or exclusions regarding the benefits paid, such as death as a result of war, aviation, or certain avocations (policies administered by Ethos do not have these additional exclusions). If you have questions about the limits or exclusions of your policy, you can look at your policy or ask your insurance company.