What is Life Insurance? The Price Factor and The Advantage?

Imagine what your family would do if you were to pass away unexpectedly. Would the loss of your income impact them? Whom do you need to protect if you were not around? We have compiled our guide so that you can be confident in obtaining life insurance to protect your family best.

Most people know that they should have life insurance. Whether they understand it or not, people have some idea that this is something I probably should have. Still, the people that truly know the value of the Insurance have experienced the impacts of a tragic, untimely death.

How Does Life Insurance Work?

Life insurance is the most straightforward insurance product. If you pass away while the policy is active, your beneficiary receives a pre-determined settlement dollar amount. After stripping away all the other stuff, this is the promise that you are purchasing.

It can become more complicated when you are looking at coverages, applications, and medical examinations. We will break this down below so that you will know how to get the best coverage for you and your family.


What are the standard features of life insurance?

These are the foundational components of all life insurance policies


The policyholder is the individual who owns the life insurance policy. In most instances, if the policyholder passes away, the death benefit is paid out. However, there are situations where you could take life insurance out on someone else.


A beneficiary is a person who receives the money or death benefit. The recipient may be an individual, group, or institution. There can be more than one beneficiary on each policy as well.


The premium is the money owed to keep the policy in force. There are several payment options, including monthly, quarterly, annually, Limited-Pay, or even Single Pay. Your insurance will most likely lapse if you stop paying your premiums.

Death Benefit

The death benefit is the money paid out to the beneficiary if the policy owner passes away while the policy is active. Laws are in place to ensure the insurance companies pay the death benefit, except in certain situations:

  • The policy owner outlives the term of their policy.
  • The policy lapses cancels or is no longer in force
  • Death occurs within two years of the insurance beginning, and the application contains evidence of fraud


What are Life Insurance Riders?

Outside of the basics of each life insurance listed above, companies generally have riders that you can customize with your policy. Riders are enhanced features you can purchase to make your basic life insurance policy fully personalized. Here is a list of a few of the most common riders you may see:

Guaranteed Insurability Rider

Purchasing Guaranteed Insurability Rider allows you to purchase additional amounts of life insurance without further medical examinations. For most companies, you can take advantage of increasing your death benefit at certain determined ages, or certain life events. Those life events could be the birth of a child, buying a home, or getting married.

Accidental Death Rider

If you pass away as a result of an accident, the Accidental Death Rider will pay out an additional amount to your beneficiary. The additional amount could be as much as double the death benefit amount. Pay close attention to what each company defines as an "accident."

Waiver of Premium Rider

The Waiver of Premium rider should be on any life insurance policy that you purchase. The Waiver of Premium rider halts your premium due if you become permanently disabled or lose your ability to earn an income as a result of injury or illness. Waiver of Premium is an exceptional rider for someone who has a family history of cancer. Towards the end of a terminal cancer event, people are unable to work, sometimes for years. The last thing that a person would want is to lose their insurance because they could not pay the premium.

Accelerated Death Benefit Rider

With the Accelerated Death Benefit Rider, insurance companies will give you an early advance if you become diagnosed with a terminal illness. Insurers advance anywhere from 25-40% of the death benefit for you to use while you are still alive. The death benefits your beneficiary receives after your passing has that amount subtracted. People use this benefit to help with covering anything from medical costs, to even using it to take their family on one last vacation.


How do you apply for life insurance?

Getting the Insurance policy has never been easier. Some life insurance plans can be issued within one day and without medical underwriting. Most of the applications though, take about two to six weeks from start to finish. Below are six steps to get your insurance policy.

  1. Obtain a free quote – You never have to pay for the insurance quote. Phoenix Protection Group will find you the best policy based upon your specific needs and have live agents who can answer any questions you may have. You do not want to make a mistake with your life insurance.
  2. Fill out the application – Our agents will complete the app for you and make sure the responses given are confidential and protected.
    Complete a phone interview – A medical examiner will contact you and ask you a few lifestyle and health questions.
  3. Take a medical exam – You may be required to take a medical exam like a scaled-down physical. The examiner can come to your home, work, or whatever location is most convenient for you.
  4. Wait for approval – The underwriter processes all the available information and will decide on a final premium based upon those factors.
  5. Sign your policy – Once you have signed and paid for your premium, your insurance will be in force, and your family can rest easier.


What is Life Insurance?


What are the different types of life insurance?

There are two basic types of life insurance, Term and Permanent. Each designed to protect a different need, but the savvy person usually has one of each during their working years.

Term life insurance

Term life insurance has a set limit of time the policy will remain in force. Typically, this is between one and 30 years. During this, your premium will stay the same. When the time limit is up, your policy will either end or become significantly more expensive. Term life product allows you to get the most amount of death benefit for the cheapest cost.

Permanent life insurance

Permanent life insurance lasts until you die as long as you keep making premium payments. Even if you live to 120 years of age! Because there is no set period, premiums are higher than Term life policies. Permanent life products do have the ability to build cash value, which has favorable rates for borrowing.


How much does life insurance cost?

Insurance companies look at several things when determining how much you will pay for your policy, but there are six key factors:

  1. Age
  2. Gender
  3. Weight
  4. Tobacco usage
  5. Personal and family medical history
  6. Risky hobbies like skydiving and deep-sea scuba

It also plays a factor if you are purchasing a term or permanent policy. A good example is Julie. Julie is 34 years old, a nonsmoker, in good health, a mother of two, and makes $50,000 a year. She has a life insurance budget of around $50 a month.
If Julie decided with her agent that Term life insurance was the best option for her, she would get a $1,000,000 policy that was good for 20 years for only $47 a month.
If Julie and her agent decided that a Permanent life policy was better for her situation, she would get a $50,000 plan that was good for her entire life for only $58 a month.
Julie and her agent also may decide to do a hybrid option where she gets a $500,000 20-year term for $28 a month and a $25,000 whole life policy for $35 a month. The dual-policy strategy is a bright idea because she has more extensive coverage during her working years, but locks in the Permanent policy at an early age.


What are the advantages of life insurance?

You know your beneficiaries will be financially taken care of

Getting a good night's sleep is invaluable. Knowing that you have taken steps to make sure that those you love would be economically okay if you died, lets you sleep a little easier.

The payout is tax-free

Your beneficiaries do not have to worry about taxes. There are no taxes paid on the death benefit. That means the whole death benefit goes to your family without the taxman getting a taste.

Alternative investment option

Life insurance as an alternative investment option is not for the average consumer, but the insurance is a financial product. Using the insurance for investing needs to be discussed in detail with a financial advisor.


Who needs Life Insurance?

Life insurance should be a foundational part of your financial and personal goals for almost every person.

Young & Single

Being young is the time to purchase this type of insurance, but so few people do. You will never be healthier or as youthful as you are today. If you have any type of debt that you do not want to burden upon your family, life Insurance would be a solution. If you still have student loan debt from a private institution, your family could be stuck with that bill. Obtaining life insurance now goes a long way to protect your family of today and the future.

Newly Married

As a newly married couple, it's time to protect yourselves. Couples tend to make life and purchase decisions based upon two people working together. Imagine doing everything in your life that your spouse does now, or vice versa. Do you think they would be able to keep up all by themselves?

Mom & Dad

If you have children, you need wealth protection for both parents. Even if mom or dad is a stay-at-home parent, they both require coverage because child care and after school care is not cheap. Like the Newly Married group, think about taking on all the responsibilities your spouse currently does if they were not there.

Near Retirement or Retired

Are your assets and cash accounts enough to provide for your family? Do you have so much money that your family may have to pay estate taxes? Do you have enough saved to make sure your burial is the way you want to be? At this age is when the final expense protection is the most expensive to purchase, but still necessary protection.


Should I use an agent to help purchase life insurance?

Information is abundant online, but when it comes down to it, you want to make sure the life insurance policy you get covers your needs precisely. Talking to a Phoenix Protection Group licensed agent can help make sure that you get exactly the coverage you need. They also can act as your advocate with the underwriters and help your beneficiaries during the claims process.
There is no difference in the premium amount you pay if you use an agent or go directly with the insurance company. You receive more by having someone who is going to make sure you and your family are protected correctly. Text, call or submit a quote request with Phoenix Protection Group today to protect your family.