Why should I buy life insurance?
People buy life insurance to help protect their loved ones from financial hardship if they were to pass away. That’s because life insurance pays out a lump-sum of money to your beneficiaries (the people you designate to receive your insurance benefit) when you pass away. They can use that money to:
- Replace lost income
- Pay for final expenses, debts or estate taxes
- Cover day-to-day living expenses
What types of life insurance can I get through work?Many employers offer term policies. They are often affordable and pay a lump-sum benefit if you pass away during a specific period, such as 10 or 20 years.
What are the advantages of purchasing life insurance through work?
Purchasing life insurance through your employer is often easier and more affordable than purchasing it on your own. For example:
- You’ll pay group rates, which may be less than individual rates
- Through an employer, life insurance is typically guaranteed issue, which means that you can get a certain amount of coverage without having to answer a lot of health questions or take a medical exam
- Your premiums will be conveniently deducted from your paycheck
You’ll know that the plan was reviewed and selected by your employer, so you don’t have to do the research yourself.
How much life insurance do I need?Everyone is different, so you’ll want to consider your specific short- and long-term needs. For example, you may want to think about how much you’d need to cover burial and funeral expenses, how much your family would need to cover everyday living expenses if you should pass away, as well as future needs like college and retirement. Also, remember to factor in inflation – keeping in mind that everything will cost more in the future than it does today.
How much does life insurance cost?
Life insurance may not cost as much as you think. Especially if you purchase it through your employer. Often employers will pay a portion of the Basic Term Life premiums for you, as an employee benefit.
Your premiums are based on factors like your age, sex, health status (including whether or not you smoke or use tobacco), and if you participate in high-risk occupations or activities. The type of policy you purchase will also affect how much you pay. Term policies often provide high quality coverage for low, affordable payments, while permanent policies will often have higher premiums.
What if I already have life insurance coverage?
You can have more than one policy, if you need it. It’s important to review your situation and your policies every year or so, to make sure nothing in your life has changed. For example, you might need to adjust your coverage if you recently:
- Got married or divorced
- Had a child or have children or grandchildren about to enter college
- Bought a new home
- Started providing care or financial assistance for a parent
Why is the insurance company behind the policy important?
Since life insurance is a long-term purchase – meaning, you hopefully won’t need it for a long time – you’ll want to make sure that the company that will provide the benefit is strong, stable and reliable. They should be financially secure, have a good claims-paying history, good customer service and competitive pricing.
Does life insurance have tax advantages?Yes, it does. If you pass away, the benefit payment your beneficiaries will receive is paid to them income tax-free. That means, they don’t have to pay taxes on the money they receive. We cannot provide any tax or legal advice. Please seek professional advice.
Are there instances where my life insurance policy will not pay out if I pass away?Most term life insurance policies are simple and straightforward, and will pay the benefit quickly if you pass away. Some plans have exclusions for circumstances such as a suicide. See your plan’s specific details and exclusions.
Who gets the money from my policy?Whoever you designate as your beneficiary or beneficiaries will receive the benefit payment(s) if you should pass away.
Why should I name a beneficiary?Because that is the best way to make sure your life insurance benefit goes to the person you want it to go to.
Who can I name as beneficiary on my policy?
You can name your spouse, a close relative, child(ren), an estate or trust as beneficiary to your policy.
- If you name a minor child, a custodian agreement or trust should be in place to ensure that all the proceeds can be paid promptly.
- A trust can be named beneficiary in order to protect minor children, but there may be tax consequences, so make sure you talk to your financial professional.
- If you name your estate, keep in mind that the life insurance proceeds cannot be released until the estate has gone through probate.
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NEW MEXICO BROKER, EMPLOYERS, AND RESIDENTS: Please be advised that this Suite of Insurance Products section of our website is not currently directed to, applicable to, or intended for any person residing in the state of New Mexico.
The policy has limitations and exclusions. Optional riders and/or features may incur additional costs. Plan documents are the final arbiter of coverage. Please read your certificate carefully for complete details regarding your benefits, reductions, limitations and exclusions. Policy form/contract ICC18 MOEBPLI; ICC18 AXEBPLI; MOEBP0618 LI; AXEBP0618 LI; and state variations.
All group insurance products are issued either by Equitable Financial Life Insurance Company or Equitable Financial Life Insurance Company of America, which have sole responsibility for their insurance and claims-paying obligations. Some products are not available in all states.