Voluntary Benefits
Published by Trustmark Voluntary Benefits on December 15th, 2020
Most people understand the gist of life insurance – that it pays your family after you pass away; but many are still fuzzy on the details:
“Are there benefit restrictions?”
“When is the best time to buy?”
“Are there different types of life insurance? If so, which is right for me?”
To clear up some common misconceptions, here are a few things you may not have known about life insurance that will help you feel more confident about purchasing a policy or understanding the life insurance policy you currently have.
1. Affordability
If you’ve avoided buying life insurance because you don’t think you can afford it, you’re not alone; 63% of adults haven’t bought life insurance because they think it’s too expensive.1 This is a common misconception; it’s probably more affordable than you think! In fact, more than 50% of Americans overestimate the cost of life insurance by 3 times or more.2 So before you dismiss life insurance as a luxury outside of your price range, do some research to find out how much it could cost you each month. If you’re still unsure, consider how important life insurance could be for securing your family’s financial future and see if you can find space in your budget.
2. What type and how much do I need?
Life insurance can fall into one of two categories: permanent or term. Generally, think of permanent life insurance as a policy you own for the duration of your life even if you change jobs while term life insurance is more like renting a policy for a certain period of time, often at a lower rate.
Many employers offer life insurance, but it may not be enough. Typically, employers only pay one to two times your annual salary, but financial experts recommend having seven to ten times your annual salary.3,4 To get a better understanding of how much life insurance you’ll need, consider your family and financial situation. For instance, if you plan to have children or already have younger children, it’s a good idea to have enough life insurance to help cover their expenses until they can support themselves.
3. The earlier you buy, the lower your rate
Age affects how much you pay in premium. Generally, you’ll get a lower rate as a young, low-risk person. Typically, the older you are, the higher your rate will be since you’re at a higher risk for health problems and passing away sooner. Depending on your policy, you might even be able to lock in your rate so that it doesn’t change as you get older. That means you could buy a life insurance policy at the age of 25 and keep that same rate as a 60 year old regardless of your health status.
4. Living benefits
Life insurance isn’t just about protecting your family after you’re gone. Some life insurance policies offer long-term care benefits you can use while you’re still alive for covering costs such as long-term care, assisted living, home healthcare or adult day care. These services can be very expensive and fall on the shoulders of your loved ones as you get older. Again, if you think you’ll never need these services or it feels like a distant worry, consider that 40% of people currently receiving long-term care are between the ages of 18 and 46 whether that be for accidents, injuries or aging.5 Plus, as people are living longer, 70% of adults over the age of 65 will eventually require long-term care.6
Some life insurance policies may also accumulate cash value over time. If so, you could access the cash value that your policy earns. You could make a withdrawal or take out a loan on your policy with the intent to pay it back later on. Keep in mind, particularly if you make a withdrawal, that there may be some tax implications and it could affect the terms of your policy.
5. You might be able to purchase coverage for your loved ones
Some life insurance policies allow you to provide coverage for your loved ones more directly. Depending on your policy options, you could buy life insurance for your spouse, children and even grandchildren. This helps your whole family be protected from the costs of a potential passing.
Now that you know more about life insurance, you can see how important of an investment it is for both you and your family members. Hopefully, this information will help arm you for future conversations with your benefits enroller. Use these topics as a guide for asking questions and doing your research to help inform your decisions the next opportunity you have to enroll.
1LIMRA Insurance Barometer Study. 2018.
2Life Happens. Taking Americans' Financial Pulse with the 2019 Insurance Barometer Study. 2019
3CNN Money. Ultimate Guide to Retirement. How big should my life insurance policy be?
4Understanding your employee benefits." Miriam Caldwell. The Balance Careers. Jan 2017
5Genworth. The Expanding Circle of Care. 2015.
6Life Happens. Startling Facts about Long-Term Care. 2015.
“Are there benefit restrictions?”
“When is the best time to buy?”
“Are there different types of life insurance? If so, which is right for me?”
To clear up some common misconceptions, here are a few things you may not have known about life insurance that will help you feel more confident about purchasing a policy or understanding the life insurance policy you currently have.
1. Affordability
If you’ve avoided buying life insurance because you don’t think you can afford it, you’re not alone; 63% of adults haven’t bought life insurance because they think it’s too expensive.1 This is a common misconception; it’s probably more affordable than you think! In fact, more than 50% of Americans overestimate the cost of life insurance by 3 times or more.2 So before you dismiss life insurance as a luxury outside of your price range, do some research to find out how much it could cost you each month. If you’re still unsure, consider how important life insurance could be for securing your family’s financial future and see if you can find space in your budget.
2. What type and how much do I need?
Life insurance can fall into one of two categories: permanent or term. Generally, think of permanent life insurance as a policy you own for the duration of your life even if you change jobs while term life insurance is more like renting a policy for a certain period of time, often at a lower rate.
Many employers offer life insurance, but it may not be enough. Typically, employers only pay one to two times your annual salary, but financial experts recommend having seven to ten times your annual salary.3,4 To get a better understanding of how much life insurance you’ll need, consider your family and financial situation. For instance, if you plan to have children or already have younger children, it’s a good idea to have enough life insurance to help cover their expenses until they can support themselves.
3. The earlier you buy, the lower your rate
Age affects how much you pay in premium. Generally, you’ll get a lower rate as a young, low-risk person. Typically, the older you are, the higher your rate will be since you’re at a higher risk for health problems and passing away sooner. Depending on your policy, you might even be able to lock in your rate so that it doesn’t change as you get older. That means you could buy a life insurance policy at the age of 25 and keep that same rate as a 60 year old regardless of your health status.
4. Living benefits
Life insurance isn’t just about protecting your family after you’re gone. Some life insurance policies offer long-term care benefits you can use while you’re still alive for covering costs such as long-term care, assisted living, home healthcare or adult day care. These services can be very expensive and fall on the shoulders of your loved ones as you get older. Again, if you think you’ll never need these services or it feels like a distant worry, consider that 40% of people currently receiving long-term care are between the ages of 18 and 46 whether that be for accidents, injuries or aging.5 Plus, as people are living longer, 70% of adults over the age of 65 will eventually require long-term care.6
Some life insurance policies may also accumulate cash value over time. If so, you could access the cash value that your policy earns. You could make a withdrawal or take out a loan on your policy with the intent to pay it back later on. Keep in mind, particularly if you make a withdrawal, that there may be some tax implications and it could affect the terms of your policy.
5. You might be able to purchase coverage for your loved ones
Some life insurance policies allow you to provide coverage for your loved ones more directly. Depending on your policy options, you could buy life insurance for your spouse, children and even grandchildren. This helps your whole family be protected from the costs of a potential passing.
Now that you know more about life insurance, you can see how important of an investment it is for both you and your family members. Hopefully, this information will help arm you for future conversations with your benefits enroller. Use these topics as a guide for asking questions and doing your research to help inform your decisions the next opportunity you have to enroll.
1LIMRA Insurance Barometer Study. 2018.
2Life Happens. Taking Americans' Financial Pulse with the 2019 Insurance Barometer Study. 2019
3CNN Money. Ultimate Guide to Retirement. How big should my life insurance policy be?
4Understanding your employee benefits." Miriam Caldwell. The Balance Careers. Jan 2017
5Genworth. The Expanding Circle of Care. 2015.
6Life Happens. Startling Facts about Long-Term Care. 2015.
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Written by Trustmark Voluntary Benefits
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