Life Insurance 101
Life Insurance 101: Everything You Need to Know
A beginner's guide to understanding types, benefits, and how policies work.
What Is Life Insurance?
Life insurance is a financial safety net that pays a lump sum—called a death benefit—to your chosen beneficiaries if you pass away. It helps replace lost income, pay off debts, cover funeral costs, and ensure your loved ones can maintain their lifestyle.
Key Features:
Policyholder: The person who owns the policy and pays the premiums.
Insured: The person whose life is covered.
Beneficiary: The person(s) who receive the death benefit.
Premium: The amount you pay (monthly or annually) to keep the policy active.
Why Life Insurance Matters
Life insurance isn’t just for parents or people with mortgages—it’s for anyone who wants to protect loved ones from financial hardship.
✅ Covers funeral and final expenses
✅ Pays off outstanding debts (credit cards, student loans, mortgages)
✅ Replaces lost income for dependents
✅ Supports future goals like college tuition
✅ Offers peace of mind and financial confidence
Types of Life Insurance
1. Term Life Insurance
✅ Affordable & straightforward
🕒 Lasts for a set number of years (e.g., 10, 20, or 30)
💰 Pays the death benefit if you pass away during the term
Best for: Budget-conscious individuals, young families, federal employees starting out
2. Whole Life Insurance
✅ Lifelong coverage
💵 Builds cash value over time (you can borrow from it)
📈 Premiums stay the same
Best for: Long-term planners, those who want guaranteed protection and savings
3. Universal Life Insurance
✅ Flexible coverage
🔁 Adjustable premiums and death benefit
💰 Cash value earns interest based on market performance
Best for: People who want both protection and investment growth
4. Group Life Insurance
🏢 Offered by employers or associations like Insured Lyfe
✅ Affordable group rates
💼 May not be portable if you leave your job
Best for: Federal employees or professionals who qualify for group benefits
How Do Life Insurance Policies Work?
Apply and qualify: Based on your age, health, and lifestyle.
Choose coverage amount and term: Pick how long you want the coverage and how much your family would need.
Pay premiums: Monthly or annually to keep your policy active.
File a claim: When the insured passes, the beneficiary submits a claim to receive the death benefit.
Optional Features (Riders)
Add-ons that enhance your policy:
Chronic Illness Rider: Access part of your benefit if diagnosed with a chronic condition.
Waiver of Premium: Keeps coverage active if you become disabled.
Child Rider: Covers your children under one policy.
💡Tip: Riders like Insured Lyfe’s Chronic Illness Rider let you use your benefits while you're still living—tax-free.
How Much Coverage Do You Need?
A general rule: aim for 10–12x your annual income.
Consider debts, dependents, education costs, and final expenses.
Use a life insurance calculator to estimate your needs.
Is Life Insurance Taxable?
Usually, no—life insurance death benefits are tax-free.
But exceptions apply if:
The benefit accrues interest (interest is taxable)
It’s included in your estate and exceeds estate tax limits
The Goodman Triangle causes gift tax issues
🔍 Read: When Is Life Insurance Taxable?
Why Women and Federal Employees Should Pay Attention
Women often live longer, earn less over time, and are more likely to provide caregiving—making life insurance essential for financial security.
Federal employees may benefit from group rates and flexible policies with Insured Lyfe that aren't capped by your salary and stay with you after retirement.
Final Thoughts: Start with the Basics, Secure Your Future
Life insurance doesn’t have to be complicated. Once you understand the basics—types, benefits, and how policies work—you’re already ahead.
✅ Choose a policy that fits your life
✅ Reevaluate every few years
✅ Make sure your family is always protected
🎯 Ready to Get Started?
Use Insured Lyfe’s free premium calculator to see how affordable coverage can be.
Or talk to an advisor to explore your options today.
