From the outside looking in, it can be confusing to navigate life insurance options and which one is best for you. However, understanding how life insurance works and how each company functions can help you narrow down your choices.
Reviewing the life insurance basics is the first step in understanding how life insurance policies work. Simply put, a life insurance policy aims to support loved ones after the policyholder passes. Typically, you pay regular premiums in exchange for the life insurance company paying your beneficiary a sum of cash after you pass.1
There are a handful of life insurance types to choose from that we will review later on. First, let’s outline what life insurance covers.
Even though every policy is different, it’s not uncommon to wonder what life insurance typically covers. Almost every life insurance plan covers a death benefit. The death benefit is the sum of money given to the beneficiary after the policyholder passes. Depending on the life insurance plan you choose, and the benefits offered, you may be able to use the death benefit to help cover the following:
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Depending on the type of life insurance policy, how it works is influenced by the rules and regulations of each plan. The four main kinds of life insurance are term, whole, final expense, and universal. Aflac offers all these life insurance types besides universal life insurance.
Term life insurance is a temporary plan that lasts 10, 20, or 30 years. The policyholder chooses the term length upfront, and their beneficiary only receives the death benefit if they pass within the specified time frame.3
On the other hand, whole life insurance allows the beneficiary to receive the death benefit regardless of when the policyholder passes. It also has a cash value portion that allows part of the premium payments to grow in a separate tax-deferred account. The policyholder may be able to access these funds in an emergency.4
Final expense life insurance is a type of whole life insurance with benefits designed to help cover end-of-life costs. These plans typically help cover funeral, medical, accounting, and long-term care costs.5
Universal life insurance is a permanent life insurance plan that handles the cash value differently. Typically, the cash value can grow based on a market index rate or a money market rate. This is a riskier decision, as it can cause the cash value to grow or decline more quickly.6
In addition to the type of life insurance plan, the cost can also vary based on how much life insurance you need. Typically, term life insurance is less expensive than whole life insurance. We recommend chatting with an agent to better understand what costs might look like based on your specific life insurance goals. You can also use our life insurance calculator to gauge coverage and costs.
At Aflac, we make it easy to get life insurance with a few simple steps. If you have any questions, feel free to reach out to an agent to help you move through this process easily.
1. Figure out your coverage needs
2. Choose a policy type and insurer
3. Submit your application
4. Take a medical exam
5. Get approved
At this point, we hope you’ve gained more clarity on what life insurance is and how it works. Aflac has helpful and affordable term and whole life insurance plans that can help you and your family meet your financial goals. We also offer final expense whole life insurance to help loved ones prepare for end-of-life costs.
Life insurance is worth it if your loved ones depend on you financially and may benefit from additional financial support later on. Chat with an agent today to explore your life insurance options and get a quote.
Explore your life insurance options.
1 Investopedia - Life Insurance What It Is, How It Works, and How To Buy a Policy. Updated Dec 22, 20233. https://www.investopedia.com/terms/l/lifeinsurance.asp. Accessed Jan 11, 2023.
2 Bankrate - What does life insurance cover. Updated Aug 15,2022. https://www.bankrate.com/insurance/life-insurance/what-does-life-insurance-cover/. Accessed Jan 11, 2023.
3 Investopedia - Term Life Insurance. Updated Aug 20, 2022. https://www.investopedia.com/terms/t/termlife.asp. Accessed Jan 11, 2023.
4 Investopedia - Whole Life Insurance. Updated Sep 7, 2022. https://www.investopedia.com/terms/w/wholelife.asp. Accessed Jan 11, 2023.
5 Investopedia - What Is Final Expense Insurance. Updated Aug 20, 2022. https://www.investopedia.com/final-expense-insurance-4801018. Accessed Jan 11, 2023.
6 US News - What is Universal Life Insurance. Updated Oct 12, 2022. https://www.usnews.com/insurance/life-insurance/universal-life-insurance. Accessed Jan 11, 2023.
Policy Series B60000 (Term and Whole Life) - In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400.
Policy Series Q60000 (Group Whole Life) – In Arkansas, Policy Q60100CAR. In Delaware, Policy Q60200M. In Idaho Policy Q60100CID. In Oklahoma, Policy Q60100COK. In Oregon, Policy Q60100COR. In Texas, Policy Q60100CTX.
Policy Series Q60000 (Group Term Life) – In Delaware, Policies Q60200C, Q60200M. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C
This is a brief product overview only. Coverage may not be available in all states including but not limited to ID, NJ, NM, NY, or VA. Benefits/premium rates may vary based on plan selected. Optional riders may be available at an additional cost. Policies and riders have limitations and exclusions that may affect benefits payable. For costs and complete details of the coverage, please contact your local Aflac agent.
Aflac insurance coverage is underwritten by Aflac.
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In New York, coverage underwritten by Aflac New York.
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