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What is Life Insurance?

It may be intimidating at first, but life insurance is an important step in preparing for your future.

Life insurance can be a very intimidating concept that sets minds racing. "Do I really need life insurance?" is one of the most common questions, but one that is top of mind for many is much simpler to answer: "What is life insurance?" While there are limitless coverage options that help our team at Lowry tailor a policy to fit your needs, there are some foundational common factors that tie all life insurance together.

Taking the time to learn about and understand what life insurance is, how it works, and why it's important helps build confidence that leads to action - an action that creates peace of mind for the future.

What is life insurance?

Life insurance is a type of insurance policy that ensures that someone's loved ones will be paid a predetermined amount of money on a predetermined basis if they were to pass away. While no one likes thinking about the grim "what ifs" of life, it's an important topic to tackle - getting ahead of the curve and ensuring that you've got a plan in place for a worst-case scenario will make a sad season of life for loved ones a little less painful with a life insurance policy in place.

While each policy varies on its specifics, life insurance can over anything from loss of income stemming from a household suffering a loss to the debt that someone leaves behind. Life insurance can also provide relief for subsequent medical bills and funeral expenses.

Yes, we know - it's not a fun thought. At its core, paying into a monthly life insurance policy is much like paying for coverage of a care or a home. However, instead of paying to insure an object, you're paying to insure a more comfortable future for your loved ones.

Family at the Beach

How does life insurance work?

Digging into the bits and pieces of a life insurance policy can be an intimidating task, but each policy has a common anatomy. A life insurance policy is made up of the policy, premiums, the death benefit, and beneficiaries. Let's break each of those down a little further.

Policy - a life insurance policy is the same concept as any other insurance policy; it's the agreement between the policyholder and the insurance company that is providing the coverage.

Premiums - insurance premiums, life insurance-related or otherwise, are the payments that are made on a regular basis to the insurance provider. Whether monthly or yearly, paying a premium is often a microscopic fraction of the total financial cost left behind after someone passes away.

Death Benefit - the death benefit is the payout that is provided by the insurance company after the policyholder passes away. The total of the death benefit varies depending on specific policy details.

Beneficiaries - a policy's beneficiaries are those that receive the death benefit after the passing of the policyholder. There could be a single or multiple beneficiaries, but they are most commonly a spouse, parents, siblings, or children of the policyholder.

Of course, it all comes back to you - the policyholder. Making the choice to sign onto a life insurance policy is a step towards taking responsibility for the future, even after you're gone. While the death benefit acts to serve the family and friends that you leave behind, the policy helps you rest assured that those that rely on you are prepared for what's to come.

Do you need life insurance?

No matter what season of life you find yourself in, signing up for a life insurance policy is a worthy investment. From recent college graduates to retirees, life insurance is able to pay dividends (albeit often in different ways).

For those in their 20s, life insurance is often the furthest thing from your mind. A recent graduation has launched you into the most exciting parts of life - meeting new people, kickstarting careers, and truly beginning to experience that the world has to offer. However, college loans and credit card debt come with these new experiences - two elements that no one wants to leave behind if the worst were to happen. Life insurance alleviates that threat, ensuring that loved ones are at ease.

In your 30s and 40s, many couples are married, renters are now homeowners, and children are coming into the picture. Life insurance for each spouse makes sure that their plans remain in place - even if one of them were to pass away. From mortgage payments to college investments, a life insurance policy helps families stress less about the financial burden, focusing more on healing and moving forward through life.

Baby's Feet

The 50s and 60s are one of life's most exciting seasons! With retirement on the horizon, many have built up savings and investments that provide the opportunity to work less and enjoy more of what life has to offer. With a larger sum of money saved up, it's easy to write off life insurance as something that isn't worth time or the small financial investment - after all, you've got so much money saved up... right? While this may be acceptable for some, if there are recurring expenses or existing debt, having a life insurance policy helps ensure that those costs won't be passed on to those that you leave behind if you were to pass away.

How much does life insurance cost?

While there are plenty of online life insurance calculators available, your true unique cost varies based on many factors. From the type of life insurance policy itself - generally between term life insurance and permanent life insurance - to the status of your health, life insurance policy monthly premiums can vary greatly. For those that are searching for a definitive cost customized to their own unique needs, the best course of action is to reach out to a trusted insurance professional to learn about your options and get a direct quote.

Lowry Insurance partners with more than 40 carriers to build custom insurance policies that help cover every area of your life. Reach out to our team today to learn more about life insurance, explore our carriers, and build a policy that is right for you.

Interested in learning how we can improve your policy? Let's talk.