Life Insurance 101: The Most Common Questions People Ask Before Buying
Updated: Sep 22
Life Insurance 101: Answers to Your Most Common Life Insurance Questions
Learn how life insurance works, who needs it, how much coverage you may need, and what to know before applying online.
Common Life Insurance Questions & Answers
Life insurance can seem complicated when you first start researching it. You may encounter terms such as term life, whole life, permanent coverage, beneficiaries, premiums, death benefits, cash value, underwriting and medical exams.
The good news is that you don't need to become an insurance expert before exploring your options.
This FAQ guide answers some of the questions consumers commonly ask when beginning their life insurance search.
What is life insurance?
Life insurance is a contract designed to provide a death benefit to designated beneficiaries when the insured person dies, subject to the terms and conditions of the policy.
The death benefit can help surviving family members or other beneficiaries deal with financial obligations after the insured's death.
Why do people buy life insurance?
People purchase life insurance for many different reasons.
Common objectives include:
Replacing lost income
Helping pay a mortgage
Covering outstanding debts
Providing money for final expenses
Helping support children
Protecting a spouse or partner
Creating an inheritance
Supporting certain estate-planning objectives
Providing financial resources for a business or other obligation
Your reason for buying coverage can help determine the type and amount of insurance you should investigate.
What is a beneficiary?
A beneficiary is the person or organization designated to receive the life insurance proceeds after the insured's death, subject to the policy's terms.
Beneficiaries can include spouses, children, relatives, trusts, charities and other eligible parties. It is important to keep beneficiary information current.
What is a death benefit?
The death benefit is the amount payable under the policy when a covered death occurs, subject to the policy provisions.
For example, a policy with a $500,000 death benefit may provide $500,000 to the beneficiary when the insured dies while the policy is in force and the claim qualifies.
What is a premium?
The premium is the amount paid to maintain the insurance coverage.
Premiums can vary significantly depending on factors such as age, health information, tobacco use, coverage amount, policy type and underwriting.
Do I need life insurance if I am young?
Being young does not automatically mean you need life insurance. However, younger consumers sometimes investigate coverage because they have financial responsibilities, dependents, debts or long-term protection goals.
Buying insurance earlier can also mean that you are applying at a younger age, which can affect pricing.
Do I need life insurance if I don't have children?
Not necessarily. Life insurance can address more than children's financial needs. Someone without children may still have a spouse, partner, mortgage, business obligations, debts or final expenses to consider.
Is life insurance expensive?
There is no single price for life insurance.
Rates depend on the applicant, the policy, the amount of coverage and the insurer's underwriting criteria.
Term insurance is generally designed as coverage for a specified period and can be less expensive than permanent coverage, although actual pricing varies.
Can I apply for life insurance online?
Yes. Some life insurance products allow consumers to complete much or all of the application process online.
JRF Services provides access to online life insurance options as well as personalized assistance for consumers who prefer to discuss their needs.
Do all life insurance policies require a medical exam?
No. Some products use an application and health questions without requiring a traditional medical examination. Other policies may require additional underwriting information.
The requirements depend on the product and insurer.
What should I do before applying?
Consider:
Who would financially depend on you?
What debts or obligations would remain?
How much income would your household need to replace?
How long would your family need financial protection?
Do you need temporary or lifelong coverage?
Who should receive the benefit?
What premium fits your budget?
Final Thought
Life insurance is ultimately about identifying a financial need and finding coverage that fits that need.
You don't have to figure everything out by yourself. JRF Services can help consumers explore available life insurance options and understand the differences between coverage types.
Important: Insurance availability, eligibility, premiums and policy features vary by carrier and state. Review the actual policy and application materials before purchasing coverage.
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