At its core, life insurance offers a way for people to help protect their loved ones. Suppose the policyholder passes away during the policy term. In that case, their beneficiaries get a predetermined death benefit useful for helping with loss the deceased’s income, paying off debts, and saving for future financial needs.
However, there is much more to life insurance than its death benefit coverage. Knowing the facts about life insurance can help people determine if they should apply for life insurance, how much to pay for it, and what kind of policy to buy.
This article will dive into five top facts people should know about life insurance in 2023.
1. Many people overestimate the cost of life insurance
The cost of life insurance varies by policy type and many other factors. However, it’s less expensive than many people think.
Although there are many different factors in costs from different insurance carriers, according to Forbes, a healthy 30-year-old male can get a 30-year, $1 million term life insurance policy for just $669 annually.1 That’s only about $56 per month.
Furthermore, the cost of life insurance coverage may be worth the added financial security and added peace of mind of the policyholder and their loved ones.
2. There are many types of life insurance
Prospective policyholders have many types of life insurance to choose from. This can help prospective policyholders of many types find coverage and terms that fit their budgets.
Term life insurance generally offers the largest death benefit for the money. As mentioned, a 30-year-old healthy male can get $1 million of coverage for 30 years for just about $56 per month.1 However, policyholders may risk outliving the policy term.
Permanent life insurance costs more than term life insurance, but coverage lasts for life, and policyholders get a cash value growth component. A portion of each premium goes into this component and grows tax-deferred at a specific rate determined by the insurer and policy type.
As the cash value grows large enough, policyholders may be able to tap into it via withdrawals and flexible low-interest loans. If the policyholder no longer needs the policy, they can surrender it and receive the cash value minus surrender charges.
Lastly, some policy types may let one skip the medical exam without giving up coverage. For example, final expense insurance may not require an exam and offers enough coverage to help with end-of-life costs, like funeral expenses and medical bills. It also offers low premiums, lifelong coverage, and a cash value growth component.
3. Life insurance is not just for families
Life insurance is popular among families because it helps parents protect their partners and children, but parents aren’t the only people who can benefit from life insurance.
For example, young and single adults can buy life insurance to help protect their aging parents and designate a favorite charitable cause as a beneficiary. Buying life insurance young lets the policyholder lock in lower premiums and build more cash value over time if it’s a permanent life insurance policy.
4. Group term life Insurance may not be enough
Many employers don’t offer more than $50,000 in group term life insurance because the IRS may tax the policyholder on any coverage above that amount.2 Plus, employees can’t take their coverage if they change jobs, get laid off, or retire.
People who need more coverage discover they can get a policy outside of work but may wonder, “How does supplemental life insurance work?”
Supplemental life insurance outside of work is just an additional life policy one can buy. It comes in many forms, such as those discussed earlier, and helps the employee bolster their coverage.
5. Life insurance can fit an estate plan
Estate plans help people distribute their assets according to their wishes and ensure other end-of-life concerns are handled.
Life insurance can fit into an estate plan by allowing seniors to designate their heirs as beneficiaries. There also may be tax advantages, meaning the senior’s heirs could potentially receive more assets by avoiding estate taxes. It is best to talk with a tax advisor to learn more about this.
Furthermore, seniors with cash value life insurance may be able to tap into their cash value to help their children or grandchildren pay for college or handle other large expenses, like a home or car purchase.
Know these facts before getting a life insurance policy
Life insurance may be less expensive than many believe — especially term life insurance. Plus, there are plenty of policy types to choose from. This offers a wide array of people, from families to single adults to retirees, the ability to find coverage that fits their needs and budget. It also helps people who need more coverage than what their group term life insurance offers find the death benefit they need.
Finally, holding onto life insurance into retirement may help offer additional estate planning opportunities with cash value.
It’s important for prospective policyholders to shop with multiple insurers. This will help them compare quotes and find the best rates on the policy that’s right for them.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. B61000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Virginia, Policies ICC0965JTO & ICC0965JWO. B60000 series: In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series: Whole: In Arkansas, Policy Q60100CAR. In Delaware, Policy Q60200M. In Idaho Policy Q60100CID. In Oklahoma, Policy Q60100COK. In Oregon, Policy Q60100COR. In Texas, Policy Q60100CTX. Q60000 series: Term: In Delaware, Policies Q60200C. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C.
Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company. The life insurance policy described herein contains an optional Accelerated Death Benefits Rider that is intended for favorable tax treatment under Section 101(g) of the Internal Revenue Code. Aflac does not give legal or tax advice. Please consult with a qualified legal, tax, and accounting advisor before engaging in any transaction. In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).
This is a brief product overview only. Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions. For complete details, including availability and costs, please contact your local Aflac agent.
Receipt of accelerated death benefits may affect eligibility for public assistance programs. Benefits may also be taxable, and are not expected to receive the same favorable tax treatment as other types of accelerated death benefits that may be available.
Aflac does not offer Universal or Variable Universal life insurance.
WWHQ | 1932 Wynnton Road | Columbus, GA 31999
NY | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
Z2300820 Exp. 7/24
1 Forbes. “Average Cost Of Life Insurance In June 2023”
2 IRS. “Group-Term Life Insurance.”