Frequently Asked Questions

Life Insurance

Your dependents’ financial needs can change over time, so it is a good idea to evaluate your policy periodically.

Some people review their policy every year, while others do so every five years. You may want to update your policy when your income changes significantly or when you experience a major life change, like the birth of a child. You may also want to reevaluate your policy to accommodate changes in the cost of living, inflation, or interest rates.
Anyone who has loved ones who rely on them for financial support should consider getting life insurance.

Stay-at-home parents should also consider getting life insurance because the services they provide, like childcare, could become an expense that the working parent has to pay if the stay-at-home parent dies while the children are still young.
There are two main types of life insurance, term life insurance and permanent life insurance.

Term life insurance is good for a certain period of time, anywhere from 1-30 years. If you live longer than the term you select, your beneficiaries do not receive any money.

With permanent life insurance, also called whole life insurance, there’s no specific time limit, so whenever you die, your family will receive the face value of the policy.

In general, premiums for term life insurance are less expensive than for permanent life insurance.
The right amount of life insurance coverage depends on many different factors.

You should take into account how much financial assistance your family will need after your death and for how long. You should also consider how much you have in savings and other financial resources that your family could depend on. When you add up how much money they will need and subtract how much money they will have after your death, the difference equals the amount of life insurance coverage you should get. Then you just have to make sure you can afford the life insurance premium for that amount of coverage.
You should purchase life insurance from a reputable and financially stable company. There are several companies to choose from, so shop around and compare policies to make sure you are getting the best rate for the coverage you need. Here, on the eHealth site, we make it easy for you to get a free, personalized life insurance quote.
Term life insurance is generally less expensive than permanent life insurance and can be easier to understand than other type of life insurance. Term life is strictly an insurance policy. On the other hand, permanent life insurance (also called whole life insurance) provides insurance, but also has an investment component, which may be more than some people need. Consult with your financial advisor, as choosing which kind of life insurance to get is an important decision.
The appropriate length for a term life insurance policy is different for everyone and depends on your particular situation. When you select a term, consider how long you need to protect your loved ones from the sudden loss of your income. In general, a younger person chooses a longer term and an older person chooses a shorter term. Some people choose a term that will last until they expect to retire. Others want their life insurance policy to last until their children have all graduated from college. 
Most people choose someone who is financially dependent on their income to be their beneficiary. Common beneficiaries are: a spouse, children, a parent, a relative, a close friend, an estate, a trust, or a charity that is important to you. You are usually allowed to change your beneficiary at any time. Be aware that if you select an estate or a trust, there may be different tax implications than if you pick an individual. If you select young children, they can’t receive the proceeds from a life insurance payout until they are 18 (16 in some states).  
If you select an individual as your beneficiary (instead of an estate or a trust), the proceeds from your life insurance payout are usually income-tax free. That means your beneficiary will receive the full amount of your policy in the event of your death. If you name an estate or a trust as your beneficiary, and the benefit is above a certain amount, it could be subject to estate taxes. Make sure you consult with your tax advisor regarding any tax implications.
Life insurance provides a lump-sum benefit to your designated beneficiaries in the event of your death. When you purchase life insurance, you agree to pay a premium, usually once a month or once a year, and the life insurance company agrees to pay a certain amount to your beneficiaries when you die. Most people buy life insurance to replace their lost income, cover final expenses, and pay off any debt they may leave behind.

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