Life insurance can help financially protect your beneficiaries upon your death. If you suddenly pass away, they'll receive a death benefit as long as you’ve kept up on premium payments, abide by the policy terms and your policy is still active. The life insurance death benefit can be used to cover expenses such as end-of-life costs, debts, and essential day-to-day purchases. Let’s dive deeper into how life insurance works and what it covers.
Table of Contents
Life insurance is a contract between you, the policyholder, and a life insurance company. You make regular premium payments and follow the terms within the plan, and the company provides your beneficiaries with a death benefit or payout when you pass away. While term life insurance applies for a certain time period, like 10, 20, or 30 years, permanent life insurance typically offers indefinite coverage as well as a cash value component.1
Life insurance policies offer these common features:2
A life insurance death benefit payout is usually a lump sum of money your beneficiaries receive after you pass away. They typically can use these funds in any way they’d like.
Cash value comes with permanent life insurance policies such as whole and universal life insurance. This life insurance feature is essentially a tax-deferred savings account that grows over time.
Life insurance riders can allow you to access your death benefit while you’re still living in certain situations. You may use them to help cover expenses related to a terminal illness, hospice or nursing home care, or anything else. Aflac offers several riders that can be added to many life insurance policies, such as the accelerated-death benefit rider* and waiver of premium rider.
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 policy 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
Don’t wait until it’s too late. Help cover yourself and your family with coverage from Aflac.
Get StartedLife insurance usually provides coverage for deaths that result from:
Your beneficiaries can use the death benefit they receive from your life insurance policy to help cover the following:3
Life insurance doesn’t typically pay out in these circumstances:4
The right life insurance plan for you depends on factors such as:
For instance, you may consider a term life insurance policy if you want coverage until your children become adults. Or, if you want lifelong coverage and can afford to pay higher premiums, whole life insurance may be right for you. Compare quotes and policy types to figure out which option is best.
Life insurance can make your loved ones' lives easier after you pass away by helping them cover expenses and pay off debts. Having a policy can help give you peace of mind knowing that they can be financially protected. If you’re interested in getting life insurance, Aflac offers a variety of life insurance policies that are worth exploring. Use Aflac’s life insurance calculator to help you determine how much coverage would be sufficient for you and your loved ones, or chat with an agent today to explore your life insurance options and get a quote today.
Get StartedLife insurance costs vary based on many factors. Learn how much life insurance is on average and what affects the cost to decide on a life insurance plan.
Life insurance covers your loved ones if you pass away unexpectedly. Learn how life insurance works, what it covers, and some types of policies available.
*Receipt of accelerated death benefits may affect eligibility for public assistance programs. Benefits may also be taxable, and are not expected to receive the same favorable tax treatment as other types of accelerated death benefits that may be available.
1 Nerdwallet - What Is Life Insurance and How Does It Work?. Updated August 29, 2024. https://www.nerdwallet.com/article/insurance/how-does-life-insurance-work. Accessed July 23, 2024.
2 Policygenius - How Does Life Insurance Work. Updated June 22, 2023. https://www.policygenius.com/life-insurance/how-does-life-insurance-work/. Accessed July 23, 2024.
3 Bankrate - What Does Life Insurance Cover. Updated July 10, 2024. https://www.bankrate.com/insurance/life-insurance/what-does-life-insurance-cover/. Accessed July 23, 2024.
4 Policygenius – What Kinds of Death Are Not Covered by Life Insurance? Updated August 10, 2023. https://www.policygenius.com/life-insurance/what-kinds-of-deaths-are-not-covered-by-term-life-insurance/. Accessed July 23, 2024.
5 Policygenius - How quickly do you get a life insurance payout? Updated August 24, 2023. https://www.policygenius.com/life-insurance/how-quickly-do-life-insurance-companies-pay-out-death-claims/. Accessed July 23, 2024.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.
Aflac life plans - 68000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. 65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series/Whole: In Arkansas & Delaware, Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Not available in Virginia. Q60000 series/Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. Not available in Virginia.
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations, and exclusions.
Aflac WWHQ | 1932 Wynnton Road | Columbus, GA 31999
Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
Z2300498R1
EXP 8/25