Life Insurance Buying Guide

Life Insurance Anderson pays a lump sum to beneficiaries after you die. This money can help cover expenses such as debts, funeral costs and income replacement. You can use online tools to estimate your life insurance needs. You can also consult with a financial professional for a more personalized analysis and a recommendation about the type of policy you may want to consider.

There are several different types of life insurance: term, whole and universal. Each type has different features and benefits. For example, some policies allow you to accumulate cash value, while others offer guaranteed death benefits. You can customize a life insurance policy by adding riders. These are typically purchased at an additional cost, though some are included with a base premium.

When choosing beneficiaries, it’s important to think about your family situation and your personal goals. In most cases, you can change your beneficiaries any time by submitting a formal request to the life insurance company. You should review your beneficiaries regularly to make sure that they are still the right people for you. In particular, you should update your beneficiary list following significant events such as marriages, births, divorces, deaths and remarriages.

Some policies include a waiver of premium rider that allows you to continue your coverage even if you stop paying the premiums. This feature is especially helpful for those with a chronic illness or other serious medical condition. Other riders provide access to a portion of the death benefit early (accelerated death benefit), or cover specific conditions (critical illness rider).


There are a few main types of life insurance. Term life policies, which last for a fixed period of time, generally cost less and do not include a savings component like permanent policy options. Permanent policies, such as whole and universal, last a lifetime and typically have a savings element that grows with dividends. These policies can also be boosted with riders that offer additional coverage, such as accidental death benefits.

When purchasing life insurance, it’s important to consider your personal and family financial situation. You want to make sure the coverage you choose will provide your loved ones with enough money to pay off any outstanding debts and cover funeral expenses. A general rule of thumb is to purchase a life insurance policy that will cover 10 times your annual income.

Life insurance premiums are based on your age, health, family history, lifestyle and any other factors that may indicate risk, such as smoking habits or driving record. A qualified agent can help you determine what type of policy and coverage amount is right for you.

Once you’ve purchased your life insurance, it’s important to understand your policy. Read through your contract carefully to find out how the policy works, what the coverage amounts are and any other terms or conditions that apply. Also, make sure you’re clear on who the beneficiaries are. Your beneficiary is the person or entity that receives your policy payout after your death. You should name primary and contingent beneficiaries in your policy, so that the secondary beneficiary will receive a portion of the payout if the primary beneficiary dies before you.

You should also review your policy to ensure you’re getting the best value for your dollar. There are a number of ways to compare policies and prices, such as the death benefit and cash value accumulation options, premiums paid, and any riders offered by each policy.


A life insurance policy provides a lump sum payment, called the death benefit, to beneficiaries upon your death. This money can help your family pay for things like funeral expenses, debts and children’s college educations. The amount of coverage you need depends on your financial goals and other resources. You also want to consider how long you need the policy to last, which is known as the term.

There are different types of life insurance policies, including term, whole life and universal. Term policies have a fixed period of time, typically between five and 30 years, during which the death benefit remains the same and the premium is level. Whole life and universal life policies have a permanent death benefit and cash value that accumulates over time. They may have a fixed or variable interest rate. During your lifetime, you can access the cash value through loans or withdrawals. Outstanding loans, if not repaid, will reduce the death benefit and cash surrender value of the policy.

You can designate more than one beneficiary for a life insurance policy and assign them a percentage of the death benefit. Beneficiaries can be individuals, such as spouses, children or parents. You can also name an entity, such as a trust. It is important to review and update your beneficiaries regularly. This is especially important after major events such as births, deaths, remarriages and divorces.

In most cases, life insurance proceeds are not subject to taxes. However, depending on the type of policy and the size of your estate, it may be necessary to discuss taxes with an attorney or tax professional. The tax treatment of life insurance can depend on how it is paid out and who owns the policy at the time of your death. Having a separate person or entity, such as a trust own the life insurance policy can help keep the payout out of your estate and avoid paying taxes.


Typically, beneficiaries don’t pay taxes on the death benefit they receive from a life insurance policy. However, there are specific situations where the beneficiary may have to pay income tax on some or all of the death benefit.

Whole life insurance policies with cash values can accumulate tax-deferred, and you can borrow against the cash value without paying taxes (as long as you pay back the loan). However, if the policy terminates or lapses before you’ve paid back the loans, the portion of the payout that represents investment gains will be taxable.

Life insurance premiums aren’t tax deductible, but if you’re purchasing a group term life insurance policy through your employer or an association, the premiums may be tax deductible as compensation. The taxation of life insurance can get complicated. It’s important to work with your financial professional to understand how different types of life insurance are taxed.

Beneficiaries inheriting a life insurance payout don’t usually have to pay income taxes, but the amount of the death benefit that is inherited could be subject to estate or inheritance taxes depending on the size of your estate and what type of policy you have. You can reduce the risk of your loved ones having to pay estate or inheritance taxes by naming beneficiaries other than yourself, and by setting up a trust to own your life insurance.

Prudential Financial and its representatives do not provide legal or tax advice. Please consult your tax or legal advisor for individual situations. This reference guide provides general information only. Massachusetts Mutual Life Insurance Company, its subsidiaries and affiliated financial professionals do not offer legal or tax advice. This material is intended to provide general background only.

It’s flexible

There are many different types of life insurance policies, each with its own advantages and disadvantages. Some are very straightforward, while others offer more flexibility and potential for cash accumulation. For example, whole life insurance can build up a cash value component that grows at a guaranteed rate. It can also include flexible premium payments and death benefits, although you may need to pay for additional costs, such as medical underwriting and charges. Another option is variable universal life, which allows you to change your premium payments and death benefit, within certain limits.

The type of life insurance you choose will depend on your goals and needs. Ideally, it should cover all the expenses that will be left behind when you die. These expenses may include debts, mortgage and children’s education. You can calculate your needs by adding up all the things you want to be paid for in the event of your death and subtracting any savings you have, as well as the income that you are expected to generate from other sources.

It is important to conduct a regular review of your life insurance policy. This is especially true after major life events, such as a divorce, birth, or job loss. It is also a good idea to check the names and contact information of your beneficiaries to make sure they are still correct.

If you need a larger death benefit, you can buy additional life insurance coverage. This is known as a paid-up addition (PUA). You can purchase this by using the proceeds from your dividends, which earn interest at a specified rate. However, you must remember that outstanding loans will reduce the death benefit.

You can also borrow against your policy’s cash value. This is an excellent option if you need the money for an emergency expense or to fund your retirement. However, be careful, as you will have to repay the loan plus the interest. In the event of a default, the insurer will deduct the outstanding loan balance from your death benefit.

You can also purchase a split-dollar life insurance policy, which provides flexibility to choose beneficiaries from a list of options. In addition to the standard beneficiary option, you can also name a contingent beneficiary, who will receive your death benefit if the primary beneficiary passes away before you do.