1. What Life Insurance Is
Life insurance is a contract between you and an insurance company:
- You pay regular premiums.
- If you pass away while the policy is active, your beneficiaries (family, dependents, etc.) receive a death benefit (a lump sum payment).
It’s designed to provide financial protection for loved ones, covering things like living expenses, debts, education, or final expenses.
2. Main Types of Life Insurance
a) Term Life Insurance
- Coverage for a specific period (10, 20, 30 years).
- Pays a death benefit if the insured dies during the term.
- Most affordable option.
- No cash value — coverage ends when the term ends (unless renewed).
b) Whole Life Insurance
- Coverage lasts a lifetime (as long as premiums are paid).
- Includes a cash value component that grows tax-deferred.
- More expensive than term life.
c) Universal Life Insurance
- Flexible premiums and coverage.
- Has a cash value tied to investments, which can grow or shrink.
- More complex than whole life.
d) Variable Life Insurance
- Permanent insurance with a cash value invested in stocks, bonds, or mutual funds.
- High growth potential but also higher risk.
e) Final Expense (Burial Insurance)
- Smaller policies meant to cover funeral and end-of-life costs.
- Usually easier to qualify for, even with health issues.
3. Typical Coverage Amounts
- Many people buy enough to cover 10–15 years of income replacement.
- Common coverage ranges: $250,000 – $1,000,000+.
- Premiums depend on age, health, lifestyle, gender, and coverage type.
4. How It’s Bought
- Through banks or insurance companies (State Farm, Prudential, MetLife, New York Life, Northwestern Mutual, etc.).
- Online insurers (Ladder, Haven Life, Bestow) offer quick approval.
- Employer-sponsored group life insurance is also common (but usually low coverage).
5. Pros & Cons
✅ Pros:
- Provides financial security for dependents.
- Can cover debts, mortgages, and education.
- Some policies build cash value (like savings).
⚠️ Cons:
- Whole/Universal life policies are much more expensive than term.
- Cash-value life insurance can be complicated and not always a good investment.
- If premiums lapse, coverage can end.
6. Current Trends (2025)
- Term life remains the most popular due to affordability.
- Growth in no-exam policies (instant approval with just health questionnaires).
- More people are using online platforms and fintech insurers.
- Rising awareness due to financial planning and post-pandemic focus on protection.