Life Insurance: Protect What Matters Most
Learn about the different types of life insurance and why an up-to-date policy is an important part of a sound financial strategy.
Life Insurance 101
How Much Life Insurance Do You Need?
When it comes to the best type of life insurance for an individual, there is no one-size-fits-all. How much and what type of coverage is needed is based on the individual and their:
- Age
- Health
- Income, current financial situation
- Number of dependents
Furthermore, the life insurance policy most suited for an individual may change over time. Major life events like getting married, divorced, having children, or changing your income can all influence your life insurance policy.
Based on these considerations, a basic rule of thumb is to have enough life insurance coverage to provide approximately 10 times your annual household income. For example, if the current household income totals $50,000, consider having a total of $500,000 in life insurance protection.
42%
of American adults say they need life insurance or more of it.
56%
of households earning under $50,000 per year have a life insurance need
102 million
American adults have a life insurance need-gap
Types of Life Insurance
Countless variations of life insurance are designed to accommodate different budgets and lifestyles. Some people may only need coverage for a specific period. In contrast, other people will need some level of flexibility in their payments. WFG agents are experienced in their craft and always aim to find policies that align with their client’s financial objectives, and budgetary constraints.
Two of the most common types of life insurance are term life insurance and permanent life insurance.
Term Life Insurance
Term life insurance offers individual life insurance protection for a specified number of years (i.e., term). This type of insurance is usually less expensive than permanent insurance with the same face value. However, term insurance does not accumulate cash value.
Permanent Life Insurance
Permanent life insurance, including whole life coverage, remains in effect until the policyholder’s death as long as the premium payments are made, unless the policy lapses or is surrendered. Most permanent life insurance policies also have some type of savings component that can build cash value over the life of the policy.
Tax-Free Death Benefit
Lower Premium
Access to Cash Value
Guaranteed Minimum Interest Rate1
Market Participation2
Flexible Premium Payments3
Yes
Yes
No
No
No
No
Yes
No
Yes
Yes
Yes
Yes
1 Varies on the type of permanent life insurance.
2 Depends on the type of permanent life insurance. Not all permanent insurance participates in the stock market or index funds.
3 Whole Life Insurance does not allow for flexible premium payments. Subject to certain limitations, premiums may be increased, decreased, skipped or stopped on other types of permanent life insurance policies, such as universal life insurance. However, the risk of a policy lapsing increases if regular premium payments are not made.
Finding the Right Insurance for Your Future
When working with an agent to assess your life insurance needs, consider these questions and answer them honestly:
- How much long- or short-term debt do you have?
- What are your long-term goals?
- How much of the insured’s income will be needed and for how long (how many years)?
- How much do you want to set aside for funeral costs and an emergency fund?
- Do I have any pre-existing health conditions that may affect my premium rates?
- How flexible is the policy in terms of adjusting coverage levels?
- What assets do you have that may be able to cover these costs?
Frequently Asked Questions
Why do I need life insurance?
Life insurance can replace your income and ensure your family's financial needs are met even after you're gone. A policy may be necessary to pay off outstanding debts, such as mortgages, student loans, credit card debts, and medical expenses after passing. A good life insurance policy may also offset childcare expenses and provide for your children's education.
At what age should I apply for life insurance?
Most people benefit from life insurance when they have financial dependents or significant financial obligations. But that doesn’t mean you don’t need it if you don’t have a family. Ideally, applying for life insurance as a young and healthy individual that need coverage will allow you to lock in a policy while premiums are lower. We encourage you to speak to an insurance agent before you get married, have kids, or buy a home.
How do I compare different life insurance policies?
Deciding on a life insurance policy for the first time can feel overwhelming, but you don’t need to do it alone. Our life insurance agents at WFG are here to help. Our licensed insurance agents are well-versed in the aspects of life insurance. They are happy to review the types of life insurance policies and the appropriate coverage amount based on your budget.
Which type of life insurance is best for me?
Term life insurance and whole life insurance each serve a different purpose. Term life insurance covers a specified term, such as 10, 20, or 30 years and offers higher coverage amounts for a lower premium than whole life insurance. Whole life insurance provides lifelong coverage for as long as premiums are paid. Consider your budget, preferred coverage duration, and goals before deciding.
We Are Here to Help
Contact a WFG life licensed agent near you.