The Benefits of Life Insurance

Life insurance may be one insurance type that is easy to overlook; after all, it’s hard to think too much about what your financial situation will be like after you die. But the reality is that life insurance is very important—not only for your own peace of mind, but for the benefit of those you leave behind.

The right life insurance policy can help ensure that your loved ones have a secure financial future after you’re gone. That said, providing for the financial needs of your beneficiaries is only one of the advantages of life insurance. Here, we dive into some of the lesser-known life insurance benefits, and why you should make sure that you and your family are covered in the event that the worst should happen.

It’s estimated that only 52% U.S. adults have life insurance policies. If you’re undecided about life insurance coverage, read on to see what benefits you might be missing out on. But first, let’s clarify one of the more confusing aspects of life insurance: the difference between the three main types of life insurance, and the benefits of each.

Term Life Insurance, Whole Life Insurance, and Universal Life Insurance

Generally, life insurance policies fall into one of three different groups: term life insurance, whole life insurance, and universal life insurance.

Term Life Insurance

Term life insurance helps provide coverage for a predetermined length of time and is a ‘pure’ form of life insurance in that it has no cash value, no payout if the policyholder outlives the policy, and no value other than the specific death benefit paid to the beneficiary.

The benefits of a term life insurance policy include:

• Lower cost
• Less complexity
• Fixed premium and death benefit for the term of the policy
• No penalty if you decide to cancel

Whole Life Insurance

Whole life insurance is a permanent form of life insurance that is designed to remain with the policyholder throughout their life, paying out regardless of when they pass away. Additionally, a percentage of the premium payments made towards this kind of policy can be saved in an account which can grow over time at a guaranteed rate, allowing policyholders to borrow against the account or even surrender the policy in exchange for cash.

The benefits of whole life insurance include:

• No limit on policy lengths
• Possible tax advantages
• Fixed premium and death benefit
• Cash value component that grows at a guaranteed rate

Universal Life Insurance

Universal life insurance is another type of permanent life insurance. It combines a death benefit with a savings component, which can accrue cash value over time based on market interest rates that can be accessed through loans or withdrawals for various financial needs. Policyholders also have flexibility in adjusting their premiums and death benefits, allowing them to adapt their coverage to changing financial needs.

The benefits of universal life insurance include:

• No limit on policy lengths
• Possible tax advantages
• Flexible premium and death benefit adjustments
• Cash value growth based on market interest rates

What Are Other Benefits of Life Insurance?

Whether you select a term life insurance policy or decide to go with a permanent life insurance policy such as whole life insurance or universal life insurance, potential life insurance benefits include the following:

Life Insurance Can Help Pay for Final Expenses

Memorial services allow survivors a chance to grieve within a supportive atmosphere and find closure on the loss of a loved one. Unfortunately, the National Funeral Directors Association reports that the average cost of a funeral is over $7,800, which can be a major expense to those you leave behind. The death benefit of your life insurance policy can be applied towards burial costs or other related expenses, to help your beneficiaries pay for your final services. 

It’s Possible to Get Coverage for Terminal Illnesses

Although most life insurance policies are designed to pay out after you pass away, some insurance policies will allow you to adjust your coverage if you are diagnosed with a terminal illness. Some policies may even offer additional coverage options allowing you to access your death benefit to pay for care or other expenses before you die.

Death Benefits Are Typically Tax-Free

Death benefits are currently not considered income and are not taxable so long as your beneficiaries receive the life insurance payout as a one-time lump sum.

Payouts Can Be Used as Inheritance

Not all of us leave this world with large estates to pass on. If you want to make sure that you have something to leave behind to your loved ones in the form of an inheritance, a life insurance policy may be the answer. Simply name your heir or heirs when selecting the beneficiaries of your policy.

Life Insurance Can be Affordable

Although it may be a common belief that life insurance is too expensive, it can actually be affordable. The Life Insurance Marketing and Research Association (LIMRA) reports that over 70% of Americans overestimate the cost of a basic term life insurance policy. It is important to review all life insurance coverage options available to you in order to see what may work for your needs and budget. Term life insurance policies are generally more affordable, making them an attractive option for individuals on a budget or those needing coverage for a specific period.

Put the Benefits of Life Insurance to Work for You

Life insurance can be one way to help provide financial security for family and loved ones in the event of a death. Life insurance benefits can also help cover funeral costs or, depending upon the coverage selected, may even help cover costs of care for the treatment of terminal illnesses. 

Life insurance can offer a sense of security and enhanced peace of mind for policyholders wishing to provide for their beneficiaries after their death. Let Acrisure help you find the right life insurance solution so you can you and your family be prepared. Contact us today or request a term life insurance quote online now.