What are the benefits of life insurance?
Life insurance can help build a foundation of financial and emotional security for your loved ones when you're no longer around. Your beneficiaries can use the funds from the death benefit to pay funeral costs or medical expenses, as well as to help pay off a mortgage, a car loan, credit card debt, living expenses, or anything else they choose. Even if you don't have dependents, you can choose a charitable organization as your beneficiary or use life insurance funds to help cover your own funeral expenses.
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Why should you get life insurance?
Life insurance is essential when your loved ones depend on your financial support. It can also be a part of an overall estate plan.
What are the advantages of life insurance?
Some of the key benefits of life insurance include:
Creates an immediate estate
Life insurance enables you to transfer wealth to your beneficiaries quickly and efficiently, generally bypassing the probate process.
Death benefit is immediately available
In most cases, the full death benefit is available regardless of how long the policy was in force prior to the insured's death.
Income replacement
By replacing your income, life insurance creates a financial safety net for your dependents. You can take comfort knowing that the policy proceeds can help take care of your loved ones' living expenses after you're gone, and an insurance policy can facilitate future plans such as your children's education or your spouse's retirement.
Pay off debt
The death benefit from a life insurance policy can help pay off the remainder of a mortgage, medical, or credit card debt so that your loved ones won't inherit that financial burden.
Pay for final expenses
It can cover funeral, burial, or cremation costs along with outstanding medical bills, estate settlement costs and other end-of-life expenses.
Tax benefits
Death benefits are not typically subject to federal income tax, which allows you to leave a tax-free inheritance to your dependents.
Donate to charity
You can donate life insurance proceeds to charity by naming the organization as a beneficiary.
Builds cash value
Permanent life insurance policies, like whole life and universal life insurance, build cash value. Part of the premium payments for a permanent life insurance policy are set aside to build cash value, which grows at a fixed or variable rate. You can borrow against cash value, or let it grow over time and potentially use it to lower your premiums.
What are the benefits of different types of life insurance?
The two basic types of life insurance, term and permanent life, have benefits suited to different needs and financial goals.
Benefits of term life insurance
- More affordable premiums as compared to permanent life insurance
- Simple, straightforward coverage which is easy to manage
- Provides coverage for a specific period, making it ideal for covering your mortgage, a child's education, or replacing an income
- Some term life insurance policies offer the option to convert to a permanent whole life policy, allowing flexibility as your financial needs evolve
Benefits of permanent life insurance
- Guaranteed lifelong protection if you pay the premiums
- Savings component which builds cash value over time that you can borrow against or use to pay premiums
- The cash value grows tax-deferred, so you don't pay taxes on the gains while these funds remain in the policy
- Some permanent life policies pay dividends, which you can use to reduce your premium or leave to accumulate interest
Find out more about the differences and benefits of term and whole life insurance.
Who could benefit from life insurance?
Determining if life insurance could benefit you — and how much life insurance you need — can hinge on your financial situation and if you have dependents, so first consider your circumstances. You have good reason to consider getting a life insurance policy in these situations, among others:
You're planning to get married
Married couples often develop lifestyles that rely on both spouses' incomes. If something happened to you unexpectedly, your spouse likely couldn't maintain the same lifestyle on their income alone.
To ensure this doesn't happen, consider obtaining a life insurance policy to lessen the potential financial burden on your spouse.
You have kids or are planning to have a baby soon
Adding a life insurance policy for you and your partner when you have children can be a smart financial move.
Opting not to get life insurance when you have children can result in the surviving parent having to work multiple jobs or completely change their lifestyle. Ask yourself simple questions like, "Will my family survive on my partner's income if something happens to me?"
About to become a parent? Read up on getting life insurance as a new parent.
You financially support aging parents
In general, if someone, including a parent, relies on your income to live, then it's crucial to consider a life insurance policy. If you're the primary breadwinner responsible for providing for your elderly loved ones, a life insurance policy can guarantee that your parents or grandparents can afford long-term care should anything happen to you.
Pro tip:
You may also consider taking out a life insurance policy on your parents' behalf, naming you as the beneficiary (the person who receives the policy's death benefit). This approach makes sense if you would be responsible for paying for their end-of-life expenses, such as funeral services, medical bills, and any debt you co-signed with them.
You're currently in debt
While the government typically forgives federal student loans upon death, private loans and mortgages may not be. In the event of your passing, any jointly held debt could become the responsibility of your loved ones, especially if they were a co-signer. One of the advantages of a life insurance policy is that it may help pay these debts.
You want to cover your funeral or estate expenses
Whether you have dependents or not, you may want life insurance designed to cover your final expenses so those costs don't fall to someone else, such as friends or family members.
Pro tip:
There are many benefits to buying life insurance, and many different types of life insurance that could suit your specific needs. Learn more about when it makes sense to get life insurance and which policies may work for you.
What happens if you don't have life insurance?
If you have a family and pass unexpectedly, your family may face significant financial challenges and uncertainty while they're emotionally upset. Your heirs may be responsible for all your unpaid bills and debts, as well as paying for final expenses, probably out-of-pocket. If your family depended mainly on your income and that becomes unavailable, how will they get by? Not having life insurance can present many problems for your loved ones.
When should you get life insurance?
It's generally better to buy life insurance sooner, rather than later, because your premiums will be lower when you're younger and healthier than as you get older and may have more health issues. Although it's more cost-effective to purchase life insurance, for example, when you're age 25 than at age 40, it's never too late to purchase life insurance at a reasonable cost. You may also want to consider life insurance for certain life events: for example, marriage, starting or growing a family, starting a business, and buying a home.
Finding the right life insurance policy through Progressive
Determining the best time to get a life insurance policy isn't always clear. We all experience life differently — so answering questions like, "Do I need life insurance after 30?" or "Do I need life insurance after 60?" depends less on your age and more on your circumstances at that age. You might need life insurance after having a baby when you're in your 30s or if you're taking care of an ailing parent when you're in your 60s.
Here are some resources to help you find the right policy for your needs:
- Life insurance calculator: Get an estimate of how much coverage you need.
- Tips for buying life insurance: Learn what to look for in an insurer, the different ways you can buy a policy, and more.
- Finding the best life insurance policy: Learn what questions to ask yourself as you compare the different types of life insurance and hone in on the type of policy that fits your needs best.
Get a quote for life insurance through Progressive
Quote life insurance online: After answering some questions, you'll choose your coverage amount and term length (if applicable).
Call 1-866-912-2477: You'll speak with a licensed Progressive Life by eFinancial representative who will guide you through everything.
Get a free life insurance quote online in minutes
Learn more about life insurance policies.
