Everything You Need to Know About Life Insurance
- mleb288
- Oct 1
- 9 min read
Life insurance isn’t just for protecting income; it’s about protecting people. Whether you’re 25 or 65, life insurance ensures your loved ones are financially supported when they need it most.
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What Is Life Insurance?
At its core, life insurance is a payout, also called a death benefit, that helps the people you choose (your beneficiaries) when you pass away.Â
For most people, their beneficiaries include their immediate family, such as their spouse and children. You can choose anyone to be your beneficiary, related or not.Â
What are the Benefits of Life Insurance?
Life insurance is meant to ease the financial burden on the people you care about most. Here are a few ways it can help:Â
Replace lost income and help pay for mortgage, bills, etc.
Cover debts like credit cards, student loans, or car payments
Pay for final expenses, such as burial or funeral
Build lasting wealth to pass on to future generations
Keep a family business running smoothly
Protect a spouse’s retirement plans
In short, life insurance isn’t solely about covering expenses after you pass away. It’s there to make sure the people you care about can continue living lives with stability and peace of mind during a difficult time.Â
Who Can Purchase Life Insurance?
Life insurance can benefit anyone at any age.
Anyone aged 18 and up can purchase their own policy
Infants and children can be covered as a rider on a parent’s policy
Life Insurance Ownership by Age Group
About 52% of U.S. adults ages 18–65 (around 172 million people) currently have some form of life insurance, either through work or an individual policy.
Here’s how coverage breaks down by generation (2024 Insurance Barometer Study):
Gen Z (18–27): ~36% insured
Millennials (28–43): ~50% insured
Gen X (44–59): ~55% insured
Baby Boomers (60+):Â ~57% insured
What these numbers tell us:
Younger adults—especially under 30—are less likely to have coverage. Many say they feel misinformed, assume it’s too expensive, or don’t think it’s necessary yet.
About 100 million U.S. adults are underinsured or uninsured, meaning they have little to no coverage. Younger generations make up a large part of this group.
Premiums rise with age and health risks. Tobacco use, diabetes, obesity, or family history of conditions like cancer can lead to higher costs or exclusions.
Takeaway: The younger and healthier you are when you buy a policy, the more affordable it is—and the easier it is to qualify.
Types of Life Insurance Explained
There are multiple types of Life Insurance policies one can purchase—each with its own advantages and disadvantages.Â
Here’s a brief breakdown of Term Life and Whole Life:
Term Life
Term Life Insurance is a type of Life Insurance that covers you for a set period of time, called a term (10, 20, or 30 years). If you pass away during that timeframe, your chosen beneficiary gets a payout. If you outlive the term, the policy ends.
Think of it like this: Think of Term Life like renting coverage. You pay a set premium each month or year to keep the policy active. If you pass away during that term, your loved ones receive the death benefit. If the term ends while you’re still living, the coverage stops—unless you choose to renew, start a new Term Life policy, or convert it into a different type of policy.
Pros
Very affordable with excellent coverage, especially when young and healthy
Simple and easy to understand
Ideal if you only need coverage for a certain timeframe (such as while raising kids, paying off a mortgage, or until retirement)
Tax-free death benefit
Cons
No cash value; doesn't grow or build savings, and you can't borrow from it
Premiums could be higher later in life after the term ends, due to age or health status
Renewal costs are usually expensive
No death benefit if you outlive the coverage term
Whole Life
Whole Life Insurance is a type of Permanent Life Insurance, designed to cover you for your entire lifetime. Whole Life policies also include a cash value component. This amount grows over time, acting like a savings account or emergency fund, which you can borrow or withdraw from to cover unexpected or major expenses.
Whole Life policies offer a guaranteed payout to beneficiaries no matter when you pass away, as long as the coverage is in force at the time of death. This death benefit is paid out tax-free and is a quicker process to pass on generational wealth without going through probate. It can even prevent the need for heirs to sell off property, businesses, or investments to cover final expenses.
Pros
Lifetime coverage
Fixed premiums for life
Builds cash value over time
Can borrow from the policy
Guaranteed death benefit
Ideal for lifelong needs (estate planning, wealth transfer, etc.)
Cons
Higher cost than Term Life policies
Slow cash value growth early on
Not for temporary needs
Risks and interest when borrowing; the death benefit may be reduced
More complex to manage
Other Types of Life Insurance
Universal Life Insurance (Permanent Life Insurance):Â Offers flexibility with premiums and death benefit, and builds cash value based on current interest rates
Indexed Universal Life Insurance (Permanent Life Insurance):Â Similar to Universal Life, but the cash value is tied to the stock market index, offering growth potential with some protection against market losses
Variable Life Insurance (Permanent Life Insurance):Â Cash value is invested into mutual funds with a higher potential for returns, but also higher risk
Final Expense Insurance (Burial Insurance):Â An affordable Whole Life policy meant to cover funeral and burial costs and smaller debts, ideal for seniors or low-income individuals
Guaranteed Issue Life Insurance:Â A Final Expense policy that accepts everyone with no health questionnaire or medical exam required, but with a 2-year waiting period, designed for those with serious health conditions who may be ineligible for traditional Life policies
Simplified Issue Life Insurance: No medical exam required but must answer some health questions, fast approval, and ideal for those who want easier access without the underwriting
Employer-Sponsored Life Plans
An employer-sponsored policy, or Group Term Life Insurance, is a common, simple, and affordable way for people to get Life coverage. 55% of working adults have Life Insurance through their job.
Pros
Free or low-cost coverage
No medical exam required
Easy to enroll through work
Cons
A term life policy that is only active during the course of employment
Lose coverage if you leave your job
Base coverage might not be sufficient for a family's needs
Unable to customize coverage
Group Term Life Insurance is a great option for many people, due to the low cost and ease of enrollment. While the coverage might not be as robust or comprehensive as an individual Life policy, some employers offer add-on options to increase the coverage for eligible employees.
Cost of Life Insurance
Life Insurance policy premiums can vary based on many factors: Type of policy, coverage amount, term length, age, health status, risk factors, and even the insurance company itself.Â
A young, healthy, non-smoking adult might expect to pay no more per month than the cost of their favorite streaming service on a Term Life Policy for a 20-30 year term.
A young, healthy, non-smoking adult may pay the same per month as a typical car insurance payment on a Whole Life Policy with generous coverage amounts.
Those who are older, have a chronic illness, or have other risk factors (such as tobacco use) typically will have higher premiums and/or lower coverage amounts, but Life Insurance is still attainable.Â
How to Save on Life Coverage
You’re not alone in thinking Life Insurance is expensive, but the good news is, there are several smart ways to save!
Let’s explore ways you can get the coverage you need without breaking the bank:
Purchase while you are young and healthy:Â Life Insurance is generally cheaper when you are younger and in good health. Locking in a policy early on can save you thousands of dollars over the lifetime of your policy!
Improve your health: Insurers consider your weight, blood pressure, cholesterol, and tobacco status. Even a few months of healthier habits and lifestyle changes can help! Quitting smoking, starting an exercise program, changing your diet, and getting chronic conditions under control can all improve your numbers, leading to lower premiums.
Compare quotes:Â Prices vary widely between companies, even for similar individuals. An independent agent is almost guaranteed to find you better coverage at a lower cost than looking for a policy on your own.
Choose a Term Life policy:Â Term Life is typically more affordable than Whole Life or other Permanent Life policies. With a Term policy, you only pay for the years you actually need coverage, such as while you have a mortgage or while your kids are growing up.
Take advantage of a Group Life policy through work:Â Most employers offer basic Term Life coverage while employed. It's often free or low-cost, even if you have a pre-existing condition. Many even offer options to buy extra coverage on top of the basic plan.
Opt for Final Expense Insurance:Â For the bare minimum, these affordable policies for older adults are designed to just cover funeral/burial costs, medical bills, and debts.
Review your policy annually: Life changes may equal less coverage needed (such as paying off your mortgage or other debt). It makes sense to only pay for the coverage you actually need! Some policies even offer a reconsideration and adjustment to the cost if your health improves after initially buying the policy.
Life Insurance Options for People with Chronic Illnesses
A common misconception is that a chronic illness diagnosis means you cannot get life insurance. Let's debunk that! The process may be more involved, and costs and coverage options may vary, but people with chronic illnesses or other risk factors absolutely can still get life insurance and ensure their families are protected.
Considerations:
Type and severity of the illness (i.e., controlled diabetes vs. late-stage cancer)
Treatment success and stability
Compliance with medical advice (i.e,. regular checkups, medications)
Lifestyle habits (i.e,. smoking, alcohol, weight management)
Important note: Make sure that you fully disclose all health information on your application. Insurers will review your medical history, check prescriptions, and possibly request medical records or require a medical exam.
Policy Options:
1. Standard Life Insurance (Term or Whole)
Still possible if the condition is well-managed (like high blood pressure or diabetes)
May be approved at a higher premium or lower benefit
2. High-Risk or Substandard Policies
Some insurers specialize in covering high-risk individuals
Premiums are higher, but coverage is still available
3. Guaranteed Issue Life Insurance
No medical exam or health questions
Acceptance is guaranteed (usually for ages 50–80)
Lower coverage amounts (like $5K–$25K), mainly for final expenses
Often has a 2-year waiting period before the full benefit kicks in
4. Simplified Issue Life Insurance
No medical exam, but you’ll need to answer a few health questions
Quicker approval
Slightly more expensive than traditional life insurance
5. Group Life Insurance through work
Basic insurance is offered at no or low cost to current employees
Add-ons may be available to increase the coverage amount
No medical exam
Pro Tip: Work with an independent agent who can shop multiple insurance companies; some policies are more lenient with certain conditions than others, and an agent can do the digging into the details for you.
Other Uses for Life Insurance
Did you know? Your Whole Life Insurance can do double-duty! A Whole Life policy acts like a savings account through something called cash value, a built-in feature that grows over time.
How does Life Insurance act like a savings account?
When you pay your premium, part of the payment goes towards the death benefit (what your beneficiaries get if you pass away), and part of it goes towards the cash value, which grows tax-deferred over time.
The insurance company then invests a portion of your premium, and the cash value grows at a guaranteed rate (plus possible dividends, depending on the policy).
When and how can you borrow the money?
You can usually start borrowing from your cash value after it has had a chance to grow (typically after 2–5 years), depending on the policy and how much you’ve paid in.
How this works:
You can take a loan against your cash value.
No credit check is required.
You don’t have to pay it back on a set schedule.
This loan accrues interest (usually 5–8%), and if you don’t repay it, the amount is subtracted from your death benefit, and your policy could lapse if the loan plus interest exceeds your cash value
Example: You have $20,000 in cash value and borrow $10,000. You don’t make any repayments. When you pass away, your family’s death benefit is reduced by the unpaid loan plus accrued interest.
Advantages:
Access to funds needed for emergencies, education costs, home improvements, or other large expenses
No taxes on the loan, if done correctly
Flexible repayment terms
Disadvantages:
Reduces your death benefit if not repaid
Loan interest compounds
If you cancel the policy with an outstanding loan, the IRS may treat it as taxable income
Consider the reward and risk:
Whole Life is like a life insurance policy and a slow-growing savings account all rolled into one. You can borrow from it once it builds enough cash value, but it’s smart to understand the risks and plan repayments as quickly as possible.
We Can Help
At LEB Insurance Group, our agents are well-versed in Life Insurance. We can assist you with finding the right type of policy that will protect you and your loved ones.