Bloomington, IN Insurance - Insurance Center Group

Life Insurance

What is a life insurance policy, and what are its key features?

Life insurance is a contract where you pay a premium to an insurance company, and in return, they agree to pay a death benefit (a sum of money) to your beneficiaries when you die. This death benefit provides financial security for your loved ones, helping them cover expenses like income replacement, debt repayment, and funeral costs.

In general, most insurance policies identify the following:

The insurer: Only certain companies can provide life insurance, and these companies are regulated by state insurance departments.
The policyholder: The person or entity (such as a family trust or a business) which owns (or “holds”) the policy. The policy can insure the holder, or it can insure another person.
The insured: The person whose life is insured.
The death benefit: The amount the insurer will pay when the insured passes away.
The beneficiaries: The people or entities that will receive the death benefit. It can all go to a single person (e.g., a surviving spouse) or it can be divided by percentage among many different people and entities (e.g., three children could each get 30% and 10% could go to a charity).
The policy length: The time period that the insurer agrees to pay a death benefit. This can be a specific term (e.g., 10 or 20 years) or it can be permanent – a policy that lasts for the life of the insured for as long as premiums are paid.
The premium: The monthly or yearly payments needed to keep the policy in effect.
The cash value: Permanent life policies, like whole life insurance, have a cash value component that builds over time2 and can be cashed out or borrowed against.3 A term policy has no cash value.

Types of Life Insurance

Term Life Insurance

Definition:: Provides coverage for a set duration, typically 10, 20, or 30 years.
Pros:: More affordable than permanent life, especially for younger individuals or those with shorter-term needs.
Cons:: Doesn't build cash value, and premiums may increase significantly upon renewal or conversion.
Suitable For:: Individuals seeking affordable coverage for a specific period, such as during child-rearing or when accumulating a large nest egg.
Examples:: Level term, decreasing term.

Permanent Life Insurance

Definition:: Provides lifelong coverage as long as premiums are paid.
Pros:: Builds cash value, which can be accessed through loans or withdrawals.
Cons:: More expensive than term life.
Suitable For:: Individuals seeking long-term protection, those who want to build cash value for future needs, or those with complex financial situations.
Examples:
Whole Life:: Provides a guaranteed death benefit and cash value that grows at a fixed rate.
Universal Life:: Offers more flexibility in premium payments and death benefits, with the cash value component potentially influenced by investment performance.
Variable Life: Allows policyholders to invest their cash value in various investment options, offering potential for higher returns but also greater risk.
Indexed Universal Life: Similar to universal life, but the cash value growth is tied to a stock market index.
Final Expense: Designed to cover burial and funeral costs, often with lower death benefits and higher premiums compared to other permanent policies.

Photo by Farah from Burst

Term Life Quote
Please note this quoting service is for educational purposes and basic comparison of plans. The premiums provided may vary due to a wide variety of reasons. If you have any questions, give us a call at (812) 337-7637. Make sure you tell us you saw the quote on the web site. We are an independent agency and represent multiple life insurance companies. The below quoter is just one example. If you don't see anything you like, please ask and we'll find it. Please contact our office for further information and support services.

Information Disclosure
In order to provide the most accurate quote possible, we may need to collect information from consumer reporting agencies, such as driving record, claims and/or credit history. Review our privacy policy for additional information.