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  • Compare options that fit your life. Customize what you’re looking for so you can see policies that best fit your exact situation.

  • Protect the people who depend on you. Life insurance provides those who depend on you financially with an important safety net.

What is life insurance?

A life insurance policy is a contract between you and an insurance company. In exchange for regular payments, called premiums, the insurer pays out money after you die. This payment goes to the people you choose as beneficiaries — usually children, a spouse or other family members. It can be an important safety net if anyone depends on you financially. Beneficiaries can use the money to repay debts, replace your income, or provide funds for future expenses like college tuition.

Who needs life insurance?

In general, people need life insurance if their death would place a financial burden on others. Examples include breadwinners, parents, homeowners, business owners and people with co-signed debt.

How much coverage should I buy?

To figure out how much life insurance you need, think about your financial obligations. Then, aim to take out a policy to match them. Another way to crunch the numbers is to multiply your annual income by 10, and use that as a rough estimate. Although you may have some life insurance through your job, it’s generally a good idea to have your own policy in addition to the life insurance provided by your employer. The policy through your workplace likely isn’t enough to meet your family’s financial needs and can end if you leave the job.

Here are some expenses to consider:

  • Outstanding debts, such as a mortgage, personal loan or credit card balance.

  • Everyday living expenses, including child care, utility bills, groceries and car insurance.

  • Future expenses, like funeral costs and college tuition.

How much does life insurance cost?

It’s cheaper than you might think. The average life insurance rate for a 40-year-old in excellent health can be as little as $27 a month for a 20-year term policy with $500,000 in coverage, according to Quotacy, a life insurance brokerage. Rates can vary among insurers — sometimes significantly. When setting your rate, each life insurance company weighs factors like your health, lifestyle and driving record differently. Some are more lenient than others, which is why it’s important to compare quotes from several insurers.

The earlier you apply, the better. No matter which insurer you go with, two of the main factors that affect your life insurance premium are your age and health. So the younger and healthier you are, the better your rate is likely to be. You can still get life insurance if you have a medical condition, but insurers vary in how they view pre-existing conditions. Some policies, such as guaranteed issue and simplified issue life insurance, don’t require an exam. These types of policies are typically called no medical exam life insurance. But, if you’re healthy, saying yes to a medical exam could actually lower your rate. That’s because the insurer has a complete picture of your health.

Common life insurance terms

You might come across these terms when you’re shopping for life insurance. Click on the terms below to see what they mean.

The person or people you select to get the life insurance payout when you die.

Another name for a life insurance company.

Permanent life insurance policies typically have an investment portion that increases in value over time. This is known as the cash value account, and once you’ve accumulated enough cash value, you may be able to borrow against your policy.

The amount of money the insurer will pay out to your beneficiaries, generally tax-free, when you die.

Some insurers are mutual companies, which means they’re partly owned by their policyholders. They may pay out a sum of money to some policyholders each year based on the company’s financial performance. These payments are dividends.

The circumstances in which your life insurance policy won’t pay out, such as death from a risky activity like skydiving. Exclusions vary among insurers and are listed in the policy documents.

The basic death benefit of the policy. For example, if you purchase a $500,000 policy, its face value is $500,000.

The person who owns the life insurance policy.

The amount of money you’ll pay to keep your life insurance policy active. With most policies, you have the option to pay monthly, quarterly, semiannually or annually.

A life insurance rider is an optional add-on that allows you to customize your coverage.

The process an insurer uses to gather information about you and set your life insurance rate.

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