Happy family of four laughing together outside at sunset

What are some of the benefits of life insurance? You might be surprised to find out how many benefits there are for you, as the policyholder. And of course, there are great benefits for your loved ones, thanks to that income-tax-free death benefit.

➡️ Rather talk to a real person about whether you should buy life insurance? We’re here to help. Call us at (800) 823-4852 and we’ll answer all your questions. Or click the button below to start with a free term life quote!

Get a Free Quote

Benefits for You

If you’re the one buying the policy, you probably think there’s nothing in it for you – after all, you’re doing this to protect your loved ones, not yourself. But there are plenty of benefits of life insurance for the policy owner, no matter which policy type you choose.

Benefits of Term Life

Term life is our most popular type of coverage. It’s simple and affordable, plus it’s available in a wide range of term lengths. Here’s what you get:

    Family of four laying on the carpet smiling
  • Peace of mind. One of the best benefits of life insurance is the feeling you get when you know your family is protected. You can stop worrying about how they’d pay for your funeral, or put food on the table if something happened to you. You’ve already taken care of it. Just be sure that you give your beneficiary(ies) the information about your policy: who your insurer is, and the contact info they provide in your policy documents. Your loved ones will need this information to file a claim if you passed away.
  • Living benefits. Did you know most insurers give you the ability to access the death benefit before you pass away if you experience certain health issues? Most carriers offer an accelerated death benefit rider for free, which means you can tap into the death benefit if you’re diagnosed with a terminal illness. That money could be used to pay for treatment, home modifications, or just to gather your loved ones around you. Most insurers offer other paid riders that let you access the death benefit if you have other health issues, such as a critical or chronic illness. That money could be incredibly useful to cover treatments, prescriptions, the out-of-pocket maximum of your health insurance, and more. You might not realize it, but you don’t have to pass away to benefit from your policy!

Benefits of Cash Value Life Insurance

This policy type covers you for the rest of your life, and also contains a cash value account. That account grows over time with a portion of your premium payments, plus interest paid by your insurer. Cash value is a financial asset, yours to draw from later in multiple ways. Click or tap here to learn more about cash value policies.

    Young mom looking up the benefits of life insurance on her laptop, as her baby plays beside her
  • Guaranteed death benefit. Unlike with term life, you can be sure your loved ones are going to get that death benefit. With term life, it’s possible you could outlive your term, which means your loved ones don’t get a payout when you pass away. That’s not the case with a cash value policy. As long as you stay current with your payments, that policy is guaranteed to pay out. Some policies are designed to mature at a particular age (say, age 90 or 100). If, by chance, you’re still alive when your policy matures, the insurer will pay you the death benefit. Either way, that money is guaranteed to go to you or your loved ones.
  • Cash value. This is one of the best benefits of life insurance that many wealthy clients use to protect and grow their wealth. Think of cash value like a savings component attached to your policy that grows over time. In most cases, you can’t pass it onto your beneficiaries, so it’s a “use it or lose it” type of benefit. To use it, you can take out a policy loan, make a partial withdrawal, or have your premium payments deducted from it automatically. If you take out a policy loan, your cash value remains in place and continues to earn interest. You also aren’t technically required to repay that loan. Any balance you owe would be subtracted from the death benefit before its gets paid out to your loved ones.
  • Living benefits. Just like with the term life benefits described above, you have all the same living benefits options with a cash value policy. Most insurers let you dip into the death benefit if you’re diagnosed with a terminal illness. When you buy the policy, you’ll have options to add other riders that give you access to the death benefit in other medical situations. Your insurer may also offer a long-term care rider, which means that if you ever need help care, you can use some of the death benefit to do so. It’s a great backup plan, since you don’t have to use it if you never need care. But if you do, it’s much less expensive than a stand-alone long-term-care policy.

➡️ Rather talk to a real person about the benefits of life insurance? We’re here to help. Call us at (800) 823-4852 and we’ll answer all your questions. Or click the button below to start with a free term life quote!

Get a Free Quote

Benefits for Your Loved Ones

The main benefit for your loved ones is the financial security that death benefit provides. Best of all, they won’t owe any income tax on that cash payout. The IRS does not categorize that payment as income – it’s simply the fulfillment of a contract between you and the insurance company. Your loved ones get to use every penny of the death benefit for the purposes you intended, rather than giving any of it to the IRS.

At the time when they need it most, your final gift will have the most impact in your loved ones’ lives.

Here are just some of the things they can do with that money:

    Young couple getting life insurance quotes online
  • Help them pay for your final expenses. According to the National Funeral Directors Association, the average cost of a funeral (with viewing and burial) is $7,848.* That’s a lot of money – especially if you add that to other expenses you may leave behind, including medical bills, credit card bills, a car payment, and anything else that your loved ones will have to pay while they sort through your accounts. Even a small $10,000 final expense policy can help your loved ones pay some, if not all, of these expenses.
  • Replace your income for a certain period of time. If people depend on you financially, what happens to them without your paycheck? Would your spouse have to go back to work? Or find a higher-paying job? Would they need to move to a less expensive house or apartment? These are huge questions that can be stressful and disruptive. Leaving behind a large enough death benefit to replace your income for at least six months to one year gives them the time to grieve, and to make those big decisions. We have some clients who leave behind enough money to pay off the mortgage so their kids won’t have to leave the family home or the schools they love.
  • Help them pay for housing, food, and daily expenses. Even if you don’t work, your life insurance death benefit can give your loved ones the cash they need to get through the grieving period without taking a financial hit. Would your spouse or partner like to take time off work to grieve? What if they don’t have any paid vacation time? Life insurance can provide the necessary cash to pay all the bills during that grieving process. That money is your final gift to them, to give them the time and space they need to process and recover.

But we can’t talk about the benefits of life insurance without mentioning the love and gratitude your family will feel. Life insurance is a gift – your final gift that lets them know how much you care about them. As they go through a difficult time, it will mean the world to them to know you were thinking of them beforehand. That you took the time to set this up for them. That you cared enough to give them as much of a financial head start as you could. It’s the ultimate way to say “I love you” – even if you’re not with them anymore.

Happy family of four with mom, dad, son, and daughter smiling for the camera

➡️ Rather talk to a real person about whether you should buy life insurance? We’re here to help. Call us at (800) 823-4852 and we’ll answer all your questions. Or click the button below to start with a free term life quote!

Get a Free Quote

*”Statistics,” nfda.org, accessed 11/7/23