What is life insurance?
Life insurance provides financial support for your family or other loved ones — anyone you choose — if you pass away. The simplest way to explain how life insurance works: you pay premiums, and, in exchange, your insurance company will pay a death benefit to your qualified beneficiaries after your death.
What are the different types of life insurance?
Term Life Insurance – Often the least expensive life insurance to start, it provides coverage for a specific period of time without increasing cost and provides a death benefit as long as you keep paying premiums until the policy term expires.
Whole Life Insurance – Permanent life insurance with guaranteed level premiums, guaranteed level death benefits, and guaranteed cash value accumulation.
Universal Life Insurance – Permanent life insurance with additional flexibility to change with your priorities.
What type of life insurance do I need?
No single type of life insurance policy is the best for everyone. You can choose a policy to address your own financial and personal situation. Contact us today to discuss the right plan for you!
How much life insurance do I need?
To figure this out, start by considering a few questions:
- How much debt (e.g., mortgage, car loan, credit card) would your loved ones have to pay if you died?
- How much of your income is used to help support loved ones?
- What financial priorities or obligations do you want life insurance proceeds to cover?
- Do you provide financial support for someone who depends on your income, such as a child with a disability or a spouse? How much, and for how long?
- How much might be needed to pay medical bills, funeral costs or other final expenses?
Some people use a rough rule of thumb to determine an amount, like seven to 10 times your annual income.
What should I consider before buying life insurance?
Start by thinking about where you are in your life and what goals or needs you want to meet with your life insurance benefit. Whether you’re a young professional, a business owner, a soon-to-be retiree or fully retired, consider your current and future financial status, debts, obligations and concerns. Ask yourself the following questions, then reach out to an agent to learn more about your life insurance options with Farmers.
- Do your financial concerns have an end date, like saving for college or paying a mortgage?
- Do you want to provide for lifelong financial needs, like retirement?
- Do you want a policy that may build cash value that you can use3, for example, to help supplement your retirement income or help pay for emergency home repairs?
When should I get life insurance?
Many people think about getting life insurance when their life is changing in a big way and they are taking on new financial responsibilities. Common turning points include:
- Change in relationship status
- Change in career or income
- New or expecting parents
- Homeownership
- Retirement
- Business succession planning