What is life insurance?
Life insurance provides financial support for your family or other loved ones — anyone you choose — if you pass away. The simplest way to explain how life insurance works: you pay premiums, and, in exchange, your insurance company will pay a death benefit to your qualified beneficiaries after your death.
What are the different types of life insurance?
Farmers Life® offers several types of life insurance coverage.
Term Life Insurance
Often the least expensive life insurance to start, it provides coverage for a specific period of time without increasing cost1 and provides a death benefit as long as you keep paying premiums until the policy term expires.
Whole Life Insurance
Permanent life insurance with guaranteed level premiums, guaranteed level death benefit2, and guaranteed cash value accumulation.
Universal Life Insurance
Permanent life insurance with additional flexibility to change with your priorities.
What type of life insurance do I need?
No single type of life insurance policy is the best for everyone. You can choose a policy to address your own financial and personal situation.
You may want to consider term life insurance if:
You may want to consider permanent (whole or universal) life insurance if:
Affordable coverage is a primary goal.
You want coverage for a specific period of time. For example, to provide for your loved ones if you die while your children are in college (to pay tuition) or while you have a mortgage (to help pay the loan).
You want to leave an inheritance or money for funeral costs or other final expenses.
- You have a lifelong dependent, such as a child with disabilities.
- You want to leave a legacy for your heirs to help pay estate or inheritance taxes.
- You want the option of using the available cash value to help:
- Pay for large purchases or settle expensive debts
- Pay medical bills during an illness
- Save or pay for college
- Provide financial support to loved ones in a time of need, or
- Cover caregiving expenses, like time off work to help a family member
You may want to consider term life insurance if:
Affordable coverage is a primary goal.
You want coverage for a specific period of time. For example, to provide for your loved ones if you die while your children are in college (to pay tuition) or while you have a mortgage (to help pay the loan).
You want to leave an inheritance or money for funeral costs or other final expenses.
You may want to consider permanent (whole or universal) life insurance if:
- You have a lifelong dependent, such as a child with disabilities.
- You want to leave a legacy for your heirs to help pay estate or inheritance taxes.
- You want the option of using the available cash value to help:
- Pay for large purchases or settle expensive debts
- Pay medical bills during an illness
- Save or pay for college
- Provide financial support to loved ones in a time of need, or
- Cover caregiving expenses, like time off work to help a family member
How much life insurance do I need?
To figure this out, start by considering a few questions:
How much debt (e.g., mortgage, car loan, credit card) would your loved ones have to pay if you died?
How much of your income is used to help support loved ones?
What financial priorities or obligations do you want life insurance proceeds to cover?
Do you provide financial support for someone who depends on your income, such as a child with a disability or a spouse? How much, and for how long?
How much might be needed to pay medical bills, funeral costs or other final expenses?
Some people use a rough rule of thumb to determine an amount, like seven to 10 times your annual income.
Whether you have life insurance through your employer or you’re starting a policy from scratch, read more here: How Much Life Insurance Do I Need?.
How much does life insurance generally cost?
Several factors can affect the cost of your life insurance policy — including your age, general health, whether you smoke and the type of policy you’re interested in.
(For more details, see What Factors Should I Consider When Evaluating Life Insurance Coverage and Cost?) Your agent can also walk you through coverage options and life insurance costs.
What should I consider before buying life insurance?
Start by thinking about where you are in your life and what goals or needs you want to meet with your life insurance benefit. Whether you’re a young professional, a business owner, a soon-to-be retiree or fully retired, consider your current and future financial status, debts, obligations and concerns. Ask yourself the following questions, then reach out to an agent to learn more about your life insurance options with Farmers.
Do your financial concerns have an end date, like saving for college or paying a mortgage?
Do you want to provide for lifelong financial needs, like retirement?
Do you want a policy that may build cash value that you can use3, for example, to help supplement your retirement income or help pay for emergency home repairs?
When should I get life insurance?
Many people think about getting life insurance when their life is changing in a big way and they are taking on new financial responsibilities. Common turning points include:
- Change in relationship status
- Change in career or income
- New or expecting parents
- Homeownership
- Retirement
- Business succession planning
How often should I review my life insurance policy?
The same kinds of major life events that prompted you to consider life insurance in the first place — getting married, having a child, buying a house, changing careers, a divorce, graduations — can shift the goals you have for your existing life insurance policy. Each significant change is a good cue for you to review your policy with your agent and make sure your coverage still meets your needs.
Learn From Experience
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What Factors Drive Life Insurance Calculations?
The first number customers usually want to look at is the amount of coverage. This is the biggest question for most customers. How much do I need?
What Should I Know Before Buying Life Insurance?
Life insurance can be a tricky topic. It’s designed to provide financial support for those who depend on you, but permanent life insurance can also be used to access money for big purchases during your lifetime through policy loans.
What Are Living Benefits on a Life Insurance Policy?
Both term and permanent life insurance offer “riders” that could potentially provide payments while you’re alive.
1 Premiums are subject to change after the initial level premium period.
2 The death benefit is guaranteed according to the terms of the contract and provided that premiums are paid.
3 Cash values may be accessible through policy loans or partial surrenders. Policy loans that are not repaid and partial surrenders will reduce cash surrender value and death benefit. Policy loans are subject to interest charges. If your policy is a modified endowment contract, loans and surrenders may incur taxes and penalties.
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