A Complete Guide to Choosing the Best Life Insurance Plan for Your Family for a Safe Future

How to Choose the Best Life Insurance Plan for Your Family

Meta Description: Find out how to choose the best life insurance plan for your family with this complete guide. Get expert advice on different types of policies, how to figure out how much coverage you need, how to avoid common mistakes, and how to make sure your financial future is safe.

As a top blog writer, I’ve been lucky enough to write about many topics that help people and families live safer, happier lives. Today, we’re going to talk about something that is very important for families all over the world to have peace of mind about their finances: choosing the best life insurance plan. This isn’t just a policy; it’s a promise, a legacy, and the deep peace of mind that your loved ones will be taken care of no matter what happens in life.

Life insurance can seem like a maze of jargon, complicated math, and seemingly endless choices for a lot of people. But I’m here to tell you that it doesn’t have to be. With this complete guide, I want to make things easier to understand, explain the ideas, and give you the useful information and steps you need to confidently choose a life insurance plan that really meets your family’s needs and goals.

We’ll go over the most important types of coverage, explain how to figure out how much protection you need, bring attention to important things that are often missed, and give you the knowledge you need to avoid common mistakes. At the end of this in-depth look, you’ll not only know what life insurance is, but you’ll also feel ready to make one of the most important financial choices for your family’s future.

Why a Life Insurance Plan Is So Important for Keeping Your Family Safe

Think about a world where your family’s financial security stays the same even if you, the main breadwinner or caregiver, are no longer there to help. This isn’t a dream; it’s the main promise of a good life insurance policy. It does more than just pay out money; it also acts as a strong financial safety net, a bridge over troubled waters, making sure that your family can keep living the way they want, reach their goals, and deal with life’s inevitable problems without having to worry about money.

It’s easy to put off talking about what happens “if” when we’re busy with our daily lives. We’re focused on the present—our jobs, our kids’ school, our mortgage payments, and saving for vacations. But you never know what will happen in life. An unexpected illness, accident, or natural disaster can change everything in an instant. A life insurance policy can’t really take the place of a loved one, but it can give your family the money they need to get through the loss without having to deal with a financial crisis right away.

Think about how your income and contributions affect your household in many ways. In addition to your salary, think about the value of the chores you do, the childcare you provide, the logistics of running the family, and the future goals you’re all working toward, like paying off the family home, sending your child to college, or giving your spouse a comfortable retirement. If you don’t have life insurance, all of these things could be at risk.

Income Replacement: This is probably the most important and immediate function. If you are the main breadwinner, your death would mean a sudden and big drop in income. A life insurance policy pays for this income, which lets your family pay for basic needs like food, utilities, transportation, and daily care.

Paying off debts: Mortgages, car loans, credit card debts, and student loans are all debts that don’t go away when you do. A good life insurance policy can give your family the money they need to pay off any debts you leave behind, which will keep them from losing their home, having their car repossessed, or having to deal with high interest payments. Think about how good it would feel to know that your spouse won’t have to worry about losing the family home.

Future Costs and Dreams: A life insurance policy can help you reach your long-term goals as well as your short-term needs. This could mean paying for a child’s college education, helping a spouse retire, or even leaving money to someone else. These numbers aren’t just about money; they’re about your family’s future and the dreams and goals that will help you get there.

Funeral and Final Expenses: Losing a loved one is very hard on the heart, but the costs of the funeral and burial can make things even harder. A life insurance policy can cover these costs right away, which can help your family during a hard time.

Peace of Mind: The peace of mind it gives you may be the most valuable benefit of all. You can live your life more fully without worrying about what might happen because you know your loved ones are financially safe, their future is safe, and your legacy of care will live on. This promise also applies to your family, giving them a sense of security that is truly priceless.

It’s not an expense to buy life insurance; it’s an investment in your family’s strength and future. It’s a proactive step that shows deep love and responsibility, and it gives you a financial safety net that changes with life’s biggest unknowns. The money you put in today can keep your family on a safe and stable path for years to come, avoiding a lot of trouble in the future.

Making Life Insurance Less Confusing: Learning About the Main Types of Life Insurance Plans

At first glance, the world of life insurance can seem complicated because there are so many different types of plans, each with its own features, benefits, and structure. The first important step in picking the right coverage for your family is to understand these basic types. There are two main types of life insurance policies: term life insurance and permanent life insurance. There are a few different types of permanent life.

Term Life Insurance Plan: Protection for a Set Amount of Time

People often think that a term life insurance plan is the easiest and cheapest kind of coverage. As the name suggests, it only covers you for a certain amount of time, or “term,” which is usually 10, 20, or 30 years. If the person who is insured dies during this time, the named beneficiaries will get a death benefit that has already been set. If the policyholder dies after the term is up, the coverage ends and there is no payout.

Benefits of a Term Life Insurance Policy:

• Cost: Term policy premiums are usually much lower than those for permanent policies, especially when you are younger and healthier. This makes it an option that families on a budget can afford if they need a lot of coverage.
• Simplicity: The idea is simple: protect the death benefit for a set amount of time. There is no complicated cash value or investment part to deal with.
• High Coverage for Lower Cost: A term life insurance plan usually lets you buy a much higher death benefit amount for the same premium than a permanent policy because it only protects you.
• Flexibility (in some cases): Many term policies have a “convertibility” feature that lets you change the policy to a permanent one before the term ends, often without needing a new medical exam. This can be helpful if your needs change over time.

Disadvantages of a Term Life Insurance Plan:

• Temporary Coverage: The worst part is that the coverage ends. Your family won’t get anything if you die before the term ends unless you renew (which usually costs a lot more) or change to a permanent policy.
• No Cash Value: A term life insurance plan does not build cash value like a permanent policy does. This means that you can’t use it as a savings or investment account while you’re alive.
• Premiums May Go Up: The first premiums are low, but if you renew a term policy at the end of its term, the premiums will probably go up a lot because you will be older and your health may have changed.

When is a term life insurance plan good for a family?
A term life insurance plan is great for families who only need coverage for certain times when they have a lot of money to handle. This usually includes:

• Families with Young Children: To make sure they have enough money to raise and educate their kids until they are grown and can support themselves.

People who owe a lot of money, like those with a 15- or 30-year mortgage. A term policy can match the time it takes to pay off these big debts, making sure they are paid off if you die.

Families on a tight budget who need the most coverage for the least amount of money to protect themselves from losing money right away.

People Who Are Just Starting Out: A term policy is a good way to protect yourself when your income is low but your future earning potential is high.

When thinking about a term life insurance plan, make sure the policy term matches your longest financial obligation. If you have a 30-year mortgage and think your youngest child will be financially independent in 20 years, a 30-year term might be the best way to cover both. Also, always ask about the convertibility feature, even if you don’t think you’ll use it. It gives you more options in the future.

Whole Life Insurance Plan: Protection for Life with a Cash Value Part

A whole life insurance plan is a kind of permanent life insurance that covers you for the rest of your life as long as you keep paying the premiums. It has a guaranteed death benefit, level premiums that don’t change, and a cash value component that grows over time without being taxed.

Benefits of a Whole Life Insurance Plan:

Lifelong Coverage: The best thing about this coverage is that it never runs out, so your family will always get a death benefit.

Guaranteed Premiums: The amount you pay each month for the policy stays the same for the whole time it is in effect. This makes it easier to plan your finances.

Growth of Cash Value: A part of each premium payment goes into a cash value account. You can borrow or withdraw money from this cash value at any time during your life, and it will grow at a guaranteed rate. This can be a way to make yourself save money or a way to get money in case of an emergency or an opportunity.

Tax Benefits: The cash value grows without being taxed, and beneficiaries usually don’t have to pay taxes on the death benefit. Loans against the cash value are also usually not taxed.

Stability and Predictability: Whole life insurance gives you a lot of peace of mind because the death benefits, premiums, and cash value growth are all guaranteed.

A whole life insurance plan has some downsides:

Higher Premiums: Whole life premiums are much higher than term life premiums for the same death benefit because they cover you for your whole life and have a cash value.

Lower Initial Death Benefit: A whole life policy usually pays out a lot less in death benefits than a term policy for the same premium, especially when you’re younger.

Less Flexibility: You usually have to pay your premiums on time every month to keep the policy in force and make sure the cash value grows.

Lower Investment Returns: The guaranteed cash value growth rate is often low and may not keep up with inflation or investments that are based on the market.

When is a whole life insurance plan right for a family?
A whole life insurance policy is often a good choice for families or people who:

• Want Coverage for Life: For things like planning your estate, paying for your funeral, or leaving a legacy, where you will always need a death benefit.
• Value Guaranteed Savings: A smart way to save money and build up cash value that you can use later in life.
• Seek Financial Predictability: People who want fixed premiums and guaranteed growth without having to worry about market fluctuations.

Set long-term financial goals, like making sure you have enough money for specific long-term care needs or adding to your retirement income.

Tip: Whole life policies are mostly insurance products, even though they have cash value. Don’t think of them only as ways to make money. Know what the policy’s fees and charges are, and compare the guaranteed growth rate to other ways to save or invest. Think of it as a part of a plan to spread out your money.

Universal Life Insurance Plan: A Flexible Plan with a Savings Component

A universal life insurance plan (UL) is a type of permanent life insurance that is more flexible than whole life insurance. It has a cash value part and covers you for life, just like whole life. But UL policies let policyholders change how much they pay in premiums and how much their death benefit is, as long as they stay within certain limits.

Benefits of a Universal Life Insurance Plan:

• Flexibility: You can change your premium payments (within a certain range) and even skip payments if the cash value is enough to cover the costs of the policy. You can also change the death benefit amount, but only if you can get more coverage.
• Cash Value Growth: The cash value part grows at a rate set by the insurer, and this growth is also not taxed until you take it out.
• Transparency: UL policies are usually more open about costs, death benefits, and other expenses than traditional whole life policies.

Some UL variations offer cash value growth linked to market indices or investment performance, which means they have the potential for higher returns.

Disadvantages of a Universal Life Insurance Plan:

Complicated: Due to their variable nature, UL policies can be more challenging to comprehend and manage compared to term or whole life policies.

• Interest Rate Volatility (for some types): The interest added to the cash value can change, which means that the cash value growth isn’t always guaranteed and could mean higher premiums later if rates go down.
• Risk of Lapse: If the cash value growth is slower than expected or the policy costs go up and you don’t raise the premiums, the policy could lapse.
• Fees and Charges: UL policies can have different fees and charges that can eat away at cash value if they aren’t handled correctly.

Different kinds of universal life insurance plans:

Indexed Universal Life (IUL): The growth of the cash value is tied to how well a certain market index (like the S&P 500) does, but it usually has a floor (minimum guaranteed return) and a cap (maximum return). This has the potential to give you higher returns than regular UL while lowering your risk.

Variable Universal Life (VUL): People who have this type of insurance can put their cash value into different sub-accounts, which are like mutual funds. This has the best chance of increasing cash value, but it also has the most investment risk because the policyholder is responsible for any losses.

When is a universal life insurance plan right for a family?
A universal life insurance plan is a good choice for families or people who:

• Need Flexibility: People whose income may change or who expect their financial needs to change over time.
• Want Permanent Coverage with Growth Potential: People who want coverage for the rest of their lives and the chance for cash value growth beyond what whole life policies usually offer.
• Are Comfortable with Some Risk (VUL): People who know a lot about investments and are willing to take on market risk in exchange for higher potential returns.
• Have Specific Estate Planning Needs: Where being able to change the death benefit and premium payments can be helpful.

If you’re thinking about getting a UL, especially an IUL or VUL, make sure you know all the fees and charges and how the cash value is credited or invested. To make sure your policy stays on track with your financial goals, you need to check on it regularly. Don’t think that being flexible means you can just “set it and forget it.”

Other Types of Niche Life Insurance Plans (A Quick Overview)

Term, whole, and universal life are the main types of life insurance, but you might also come across other types that are more specific:

Group Life Insurance Plan: This is a benefit that employers often offer. It usually only covers a short period of time and may not be enough on its own.

Final Expense (or Burial) Life Insurance Plan: These are small whole life policies that are meant to pay for funeral and burial costs. They often have easier underwriting.

A joint life insurance plan covers two or more people, like a couple. It pays out when the first person dies (first-to-die) or the last person dies (survivorship or second-to-die).

Survivorship Life Insurance Plan: A type of joint life insurance that only pays out when the second insured person dies. High-net-worth couples often use this type of insurance for estate planning.

Helpful Hint: Group life insurance through your job is a great benefit, but it usually doesn’t cover all of a family’s needs. It’s usually a good idea to add an individual life insurance policy that you own and control to it.

The Art of Precision: How to Figure Out How Much Life Insurance Your Family Needs

Finding the right amount of coverage for your family’s life insurance plan is probably the most important thing to do. If you don’t get enough coverage, your loved ones could have a lot of trouble with money. If you get too much coverage, you might be paying too much for things you don’t need. This isn’t a simple calculation. You need to carefully look at your family’s unique financial situation, current debts, and future goals.

The goal is to make sure that the death benefit is enough to cover your family’s living expenses, debts, and future needs without you. When you think about this, think about costs that are immediate, ongoing, and in the future.

The most important parts of your family’s financial needs

Let’s first talk about the most important financial areas that a life insurance plan needs to cover before we get into the details of the formulas.

Costs Right Away:

• Costs of the funeral and burial: These can be high, often between $8,000 and $10,000 or more in many places.
• Medical bills that aren’t covered by health insurance are called “uninsured medical expenses.”
• Costs of settling an estate include probate, legal fees, and taxes.
• Emergency Fund Replenishment: To make sure your family has cash on hand for emergencies.

Ongoing Costs (Replacing Lost Income):

• Everyday costs include groceries, utilities, transportation, clothing, personal care, entertainment, and other household costs.
• Mortgage or rent payments: To make sure your family can stay in their home without having to worry about money.

Other Debts: Any other debts that your family would have to pay off, like credit card balances, car loans, personal loans, student loans, and so on.

Childcare Costs: If one parent takes care of the kids most of the time and needs to go back to work, or if the current costs of childcare would stay the same.

Spousal Support: To help pay for your spouse’s living expenses, especially if they are not working right now or need time to change careers.

Adjusting for inflation means thinking about how the cost of living will go up over time.

Costs in the Future:

Children’s education: money for each child’s college tuition, books, and living costs. This can cost a lot.

Retirement Funding for Spouse: Making sure your spouse can still have a comfortable retirement, even if you don’t have any income or retirement account contributions.

Long-Term Care for Dependents: If you have dependents with special needs who will need care for the rest of their lives.

Major Future Purchases: Money set aside for possible down payments on homes, weddings, or other big life events in the future.

How to Figure Out How Much Life Insurance You Need

There are a few ways to figure out how much coverage you need. It’s often best to use a mix of these or talk to a financial advisor who has access to more advanced “needs analysis” tools.

1. The “10 Times Income” Rule of Thumb (Simple Way):

Method: A common piece of advice is to buy a life insurance policy that pays out at least 10 times your yearly income when you die. Some estimates say you should have 10 to 15 times your income, plus $100,000 for each child to pay for college.

For instance, if you make $75,000 a year, you might want a policy worth between $750,000 and $1,125,000. Add $200,000 for education if you have two kids. This brings the total to $950,000 to $1,325,000.

Pros: It’s easy to understand and quick to figure out.

Disadvantages: This is a very broad generalization that doesn’t take into account each person’s financial situation, debts, or family needs. It can cause people to be too or not enough insured.

2. Debt, Income, Mortgage, and Education (the DIME Formula):

Method: This method is more thorough because it adds up four main financial categories to get a coverage amount.

Debt: Add up all of your non-mortgage debts, like credit cards, car loans, personal loans, and student loans.

Income: Take your yearly income and multiply it by the number of years your family would need help with money (for example, 10–20 years, or until your youngest child is on their own).

Mortgage: Add up the total amount still owed on your mortgage.

Education: Figure out how much it will cost for each child to go to college.

For example:

$50,000 in debt

$80,000 a year for 15 years = $1,200,000

$300,000 for a mortgage

$200,000 for two kids’ education

The total DIME coverage is $50,000 + $1,200,000 + $300,000 + $200,000 = $1,750,000.

Pros: More specific than the income multiplier and covers big debts.

Cons: It might still miss other important future costs or the value of contributions that don’t bring in money.

3. The Human Life Value (HLV) Method:

Method: This method figures out how much your future earnings potential will be worth when you retire. It takes into account your current income, age, expected retirement age, taxes, and inflation. The goal is to make up for the money you would have given your family over your working life.

Pros: A smart economic method that figures out how much money you’ve made over your lifetime.

Cons: It can be hard to figure out exactly how much you owe without financial modeling tools, and it doesn’t take into account contributions that aren’t income-related or certain future costs.

4. The Most Complete Capital Needs Analysis:

This is the method that most people think is the most thorough and accurate. Financial advisors often use it. It means carefully looking at all of your family’s current and future financial needs, such as replacing income, paying off debt, paying for education, retirement for a spouse, and final expenses. To find out how much new life insurance you need to buy, you take this total and subtract your current liquid assets (savings, investments, existing life insurance plans, and retirement funds).

For example:

Total Needs (carefully calculated): $2,500,000

Less: Current Liquid Assets (savings, policies, investments): $500,000

You need $2,000,000 in life insurance.

Pros: Very tailored and accurate, giving you a realistic view of what your family needs.

Cons: Needs a lot of information and careful math.

Tip: Don’t use only one method. Start with the DIME formula, then make it better with a capital needs analysis that takes into account all of your family’s unique needs. Online calculators can also be useful, but you should always check the assumptions they make and change them to fit your needs. When figuring out how much money you’ll need in the long term, don’t forget about inflation.

How to Choose a Life Insurance Plan: Important Things to Think About

There are a lot of small things that will have a big impact on your choice of the best life insurance plan for your family, in addition to knowing the different types of policies and how to figure out how much coverage you need. These things help make the policy fit your needs, making sure that it is not only enough but also long-lasting and effective.

Age and health are the most important factors in affordability.
Your age and health are the most important factors in deciding how much a life insurance plan will cost and how easy it will be to get. Insurance companies look at risk, and in general, younger and healthier people are less likely to die early, which means lower premiums.

Age: If you buy life insurance when you’re younger, your premiums will usually be lower. Every year, premiums can go up a lot, especially when you reach certain age groups (like your 30s, 40s, or 50s). This is why “waiting to buy” is a common mistake.

Health: Your current health, medical history, family medical history, and lifestyle choices (like smoking, drinking, and doing risky hobbies) all affect your ability to get insurance and the cost of your premiums. Be truthful on your application; hiding information could cause your claim to be denied. Having a pre-existing condition can make your premiums go up or limit your coverage options.

Medical Exam: A lot of policies, especially those with higher death benefits, require a medical exam. This usually means that a paramedic will come to your house to take blood and urine samples, measure your height and weight, and check your blood pressure. There are “no-medical-exam” options, but they usually cost more or have lower coverage limits.

If you want to get the best rates on life insurance, it’s best to do it when you’re young and healthy. You might be able to reapply or ask for a re-evaluation to lower your premiums if your health gets a lot better after you buy a policy (for example, if you quit smoking or learn how to manage a chronic condition).

Budget and Affordability: Finding a Balance Between Needs and Reality

It’s important to know how much coverage you need, but your budget is a big factor in what you can actually afford. Having some coverage is better than having none at all.

Check Your Finances: Take a look at how much money you make, spend, and save. How much can you comfortably set aside each month or year for a life insurance premium without putting other important bills at risk?

Put Coverage First: If the amount of coverage you want seems out of reach, put it first. Is it more important to replace your income right now or pay off a big mortgage? Sometimes, a combination of policies, like laddering multiple term policies, can be a cost-effective way to meet changing needs.

Don’t overextend: Don’t buy a policy you can’t keep up with. If you miss a payment and let your policy lapse, you will lose coverage and maybe any cash value you have built up.

If money is a big problem for you, a practical tip is to start with a cheap term life insurance policy. You can always get more coverage or switch to a permanent policy later when your finances are better. You can use online premium calculators to see how much different providers charge for different amounts of coverage and terms.

Financial Goals: Making Sure Your Policy Matches Your Family’s Goals

The type and structure of your life insurance plan should be based on your family’s short- and long-term financial goals.

If your main goal is to replace your income for a certain number of years until your kids are grown, a term life insurance plan is usually the best option.

Paying Off Debt: If your main goal is to make sure that certain debts, like your mortgage, are paid off, a term policy that matches the loan term can work.

Funding for Education: Look into a policy that gives you a big enough lump sum at the right time to help pay for college in the future. You can use term policies or permanent policies that build up cash value to get money for school or take out loans.

Estate Planning/Wealth Transfer: A whole or universal life insurance plan is usually better for leaving a big inheritance or paying estate taxes because it covers you for your whole life.

Long-Term Care: Some permanent policies have riders or features that let you speed up the death benefit to pay for long-term care.

Tip: Talk openly with your spouse or partner about your shared financial goals and priorities. This makes sure that the life insurance plan you choose fits with your family’s shared vision for the future. If you want to learn more about full financial planning, check out our article “Building a Resilient Family Budget.”

Dependents and Their Specific Needs: Not Just Kids

When you think of dependents, you probably think of your kids first. But your life insurance policy should cover everyone who depends on you financially.

Spouse/Partner: Even if your spouse works, your income may be very important for keeping up your current way of life or paying for things you both need. Think about their future retirement, especially if your death would make it harder for them to save.

When thinking about kids, think about how old they are, how many years it will be until they can support themselves, and what they want to learn.

Parents or other family members who are getting older: If you help them with money or care for them, you need to think about how they will continue to be healthy.

Dependents with Special Needs: If you have a child or other dependent with special needs who will need care for the rest of their life, your life insurance should be set up to give them money for the rest of their life, usually through a special needs trust.

Tip: Make a detailed list of all the people who depend on you and figure out how much money you give them each year and how long they will probably need that money. This detailed method makes sure that everyone is included in your coverage calculations.

Policy Riders and Customization: Making Your Life Insurance Plan Fit Your Needs

You can add riders to your life insurance plan to get extra benefits or more flexibility. They can be a good way to protect yourself, even though they cost more.

Waiver of Premium Rider: If you become completely disabled, this rider lets you stop paying premiums.

Accelerated Death Benefit Rider (Living Benefits): If you have a terminal, critical, or chronic illness, this lets you get some of your death benefit while you are still alive. This can be very helpful for paying for care or medical bills.

Child Term Rider: This adds a little bit of term coverage for your kids to your policy.

Guaranteed Insurability Rider: Lets you buy more coverage on certain dates in the future (like when you get married or have a baby) without having to take a new medical exam.

Accidental Death Benefit Rider: If you die in an accident, this rider gives you an extra death benefit.

Helpful Hint: Talk to your agent about the riders that are available. Some riders, like the Accelerated Death Benefit, can be very helpful during tough health crises, making your life insurance plan more flexible. Not all riders are necessary, though.

The Beneficiary Blueprint: Making Sure Your Life Insurance Plan Covers the Right People

It’s just as important to choose the right life insurance plan and coverage amount as it is to name the right beneficiaries. When you die, these people or groups will get the death benefit. If you make mistakes or leave out information when naming beneficiaries, it could cause big delays, legal problems, or even the death benefit going to the wrong people.

Your Financial Line of Succession: Primary vs. Contingent Beneficiaries

When you name beneficiaries, you usually name both primary and contingent beneficiaries.

Primary Beneficiary: This is the person you want to get the death benefit first. You can choose one main beneficiary or more than one. You can also say how much each one will get, like 50% to your spouse, 25% to Child A, and 25% to Child B.

Contingent (or Secondary) Beneficiary: This is your backup. If all of your primary beneficiaries die before you or can’t be found, the death benefit will go to the contingent beneficiary or beneficiaries. It’s important to name contingent beneficiaries so that the death benefit doesn’t go to your estate, which could lead to probate and possible taxes.

Tip: Always list both primary and secondary beneficiaries. Things happen in life, and your main beneficiary might die before you do. Having a backup makes the payout process go more smoothly. Check on your beneficiaries often and make changes when big things happen in your life.

Revocable vs. Irrevocable Beneficiaries: You Can Change Your Mind

You can also say that beneficiary designations are revocable or irrevocable.

Revocable Beneficiary: This is the most common type. As the policy owner, you can change a revocable beneficiary at any time without their permission. This gives you options as your life changes.

Irrevocable Beneficiary: You can’t change the name of an irrevocable beneficiary without their written permission. This designation makes the beneficiary safer, but it makes it very hard for you to change things as the policy owner. It is not often used unless there is a specific legal or financial reason, like in some divorce settlements or estate planning strategies.

Most people should choose revocable beneficiaries for their life insurance plan so they can keep control over it as their family relationships and dynamics change over time.

Protecting the Weak by Naming Minors and Trusts

One important thing for families to think about is naming their minor children as beneficiaries. A large death benefit can’t go directly to or be managed by kids who aren’t yet adults (usually 18 or 21, depending on the state).

Naming a Guardian or Custodian: Under the Uniform Transfers to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA), you can name a legal guardian or custodian to look after the money until the child is an adult. But these accounts give the child full control of the money when they turn 18, no matter how mature they are financially.

Naming a Trust: The best way to protect minor beneficiaries or those with special needs is to name a trust as the beneficiary of your life insurance policy. You would set up a revocable living trust or an irrevocable life insurance trust (ILIT) and make the trust the main beneficiary. The trust document then explains how and when the death benefit money should be given to your children or other dependents and how it should be managed, which is usually over a long period of time. This gives you a lot more control and safety.

Special Needs Trusts: A special needs trust is very important for dependents who have disabilities. If you name them directly, they might not be able to get government benefits. A special needs trust lets the life insurance money be used for their benefit without making them ineligible for important help.

If you have young children or dependents with special needs, it’s a good idea to talk to an estate planning lawyer about setting up a trust. This makes sure that the death benefit from your life insurance policy is handled properly and given out according to your wishes, which is the best way to protect your loved ones. You could also check out our blog post on “Estate Planning Essentials for Families” for more information.

Payout Options: How Your Beneficiaries Get the Money

A lump sum is the most common way to pay out the death benefit from a life insurance policy, but insurers also offer other options:

Lump Sum: The beneficiary gets the whole death benefit in one payment. This is the most common and often preferred way, as it gives you quick access to cash.

Installments (Fixed Period or Fixed Amount): The death benefit is paid out in fixed amounts or over a set period of time (like 10 or 20 years) until the money runs out. This can make it look like the beneficiary is getting money on a regular basis.

Retained Asset Account: The insurance company keeps the death benefit in an account that earns interest, and the beneficiary can write checks against the balance. This lets you get to the money right away while the rest of it earns interest.

An annuity is a type of death benefit that turns into an annuity, which guarantees income payments for a set amount of time or for the rest of the beneficiary’s life.

Helpful Hint: Even though you can often choose a preferred payout option, beneficiaries usually have the freedom to choose the payout method that works best for them when they make a claim. But knowing what your family can do with the money from your life insurance policy will help you tell them how to best use it.

Why it’s important to be accurate and review things often

When choosing beneficiaries, it is very important to be accurate. Mistakes in spelling, wrong social security numbers, or out-of-date information can make it take a long time to process a claim.

In addition, your life circumstances change. Things that were okay five or ten years ago might not be okay now.

Marriage or Divorce: You may need to add a new spouse or take away an ex-spouse.

Having a baby or adopting one means adding new dependents.

If a primary or contingent beneficiary dies, you will need to change your designations.

Big Changes in Health: For a beneficiary who might now need long-term care or have different financial needs.

Tip: Check your life insurance beneficiary designations at least once a year and right after any big life event. This easy step makes sure that your wishes are followed and that your family gets the protection you wanted, without any extra trouble.

Avoiding the Pitfalls: Common Mistakes When Buying Life Insurance

Many people and families make common mistakes when they try to get life insurance, even though they mean well. Knowing about these problems can save you a lot of money and stress, and it will make sure that your life insurance plan really works when you need it most.

1. The Most Dangerous Mistake: Underestimating Coverage Needs

This is probably the most common and serious mistake. People often think of a round number, like $500,000, without really looking at their family’s actual debts.

The Problem: If you don’t get enough coverage, your family is at risk. A payout that only covers the mortgage and leaves no money for daily expenses, school, or other debts is not enough. It’s like building half a bridge; it won’t get your family safely to the other side.

Why It Happens: People think their current assets are worth more than they really are, they don’t think about how much things will cost in the future (like inflation or college tuition going up), or they just pick a random number.

How to Avoid: Use the DIME formula or a full analysis of your capital needs. Be very honest with yourself about all of your family’s current and future financial responsibilities. It’s better to have a little too much insurance than not enough. Talk to a financial advisor who knows a lot about figuring out your insurance needs.

Tip: Always be careful. The main reason to get life insurance is to protect yourself, even though premiums are a factor. Don’t cut back on the coverage your family really needs just to save a little money on the premium.

2. The Price of Putting Off Buying

People often say things like “I’ll get to it next year” or “I’m young and healthy; I don’t need it yet,” which can lead to expensive mistakes.

The problem is that your age and health directly affect how much you pay for life insurance. As you get older and have more health problems, your life insurance plan will cost you more. If you get a serious health problem, you might not be able to get insurance at all.

Why It Happens: People think they don’t need it right away, they can’t afford it, or the task seems too big.

How to Avoid: Get life insurance as soon as you have people who depend on you financially or a lot of debt. A smaller, more affordable policy is better than no policy at all. Getting lower rates when you’re young and healthy will save you money for the rest of your life and make sure you have coverage if something bad happens to your health.

Tip: Don’t wait. A small term life insurance policy can give a young family a lot of protection at a surprisingly low cost. Consider it a way to make sure your future self can get insurance.

3. Picking the Wrong Policy Type: Your Needs Don’t Match

If you choose a permanent policy when a term policy would be better, or the other way around, you could end up spending too much money or not getting enough coverage.

The Problem: If you choose a whole life insurance policy when you only need coverage for a short time (like until your kids are grown), you’ll have to pay higher premiums for coverage you don’t need. On the other hand, if you have permanent needs (like estate planning), picking a short-term policy leaves a gap in coverage.

Why It Happens: Agents may push products with higher commissions, you may not understand how policies work, or you may not be clear about your financial goals.

How to Avoid: Know the differences between term and permanent life insurance plans very well. Make sure the type of policy you choose fits your specific financial goals and the length of time you have to pay your bills. If you only need coverage for a short time, term is probably the best option. Permanent insurance is the best choice if you want coverage for the rest of your life and want cash value.

Real Tip: Don’t let commissions or hard-to-understand language change your mind. Pay attention to what your family really needs. If an agent is trying to sell you something that doesn’t seem to fit your goals, get a second opinion or do more research on your own.

4. Not paying attention to the fine print and policy details: The devil is in the details.

A lot of people who have policies only think about the death benefit and the premium, not the important terms and conditions in the policy document.

The Problem: If you don’t understand exclusions (like a suicide clause or hazardous activities), waiting periods, loan terms, fees, and charges, your beneficiaries may be in for some unpleasant surprises or a smaller payout.

Why It Happens: Policy documents are long and full of legalese, which can make them seem too much to handle.

How to Avoid: Read your policy carefully. If you don’t understand something, ask your agent to explain it. Pay close attention to any conditions that might lower or deny a claim, and make sure you know how the cash value (if there is one) grows and how to get crashing. Find out how long your policy gives you to make payments.

Useful Advice: Most places give you a “free look” period of 10 to 30 days after you get your new life insurance policy. During this time, you can read the policy and return it for a full refund if you decide you don’t want it. Take this time to carefully go over every detail.

5. Relying Only on Life Insurance from Your Job: A False Sense of Security

A lot of people think that their work group life insurance is enough.

The Problem: Employer-provided life insurance plans are often limited (for example, they only cover 1–2 times your annual salary), they may not be portable (you lose them if you leave the job), and they are usually not tailored to your family’s needs.

Why It Happens: It’s easy, and people think that “free” or cheap coverage is enough.

How to Avoid: Don’t think of the coverage your employer gives you as your main life insurance policy. Buy a policy that you own and control, and make sure it can be taken with you and covers you well no matter what your job situation is.

Tip: Always get a private life insurance plan that meets all of your family’s needs in addition to the coverage your employer provides. This makes sure that you always have enough protection, even when you change jobs.

6. Not regularly reviewing and updating your policy: a safety net that doesn’t move

Your life insurance plan should change as your life does. If you set it and forget it, your policy will quickly become out of date and useless.

The issue is that your coverage needs, beneficiaries, and financial goals change over time. An old policy might not have the right beneficiaries, not enough coverage for new debts or dependents, or a structure that doesn’t work well.

Why It Happens: Being busy, not paying attention, or not knowing how important it is to review policies regularly.

How to Avoid: Set up yearly reviews of your life insurance policy and do them right after any big life events. This includes getting married, getting divorced, having or adopting children, getting a big raise, making a big purchase (like a new home), or losing a beneficiary.

Tip: Set a reminder in your calendar to review your insurance every year. Include it in your regular financial planning. Taking these steps ahead of time makes sure that your life insurance plan stays a useful and powerful way to protect your family. Check out our guide on “The Importance of Regular Financial Health Check-ups” for more information.

What Families Need to Know About the Taxes on Their Life Insurance Plan

To get the most out of your life insurance plan and make sure your beneficiaries get the money they need without any surprise deductions, you need to know how it affects your taxes. Most families don’t have to pay taxes on the main benefit, which is the death benefit, which is a good thing. But there are some details and situations where taxes may apply.

The Main Benefit: Usually Tax-Free

Death Benefit: Most of the time, the death benefit that beneficiaries get from a life insurance policy is not subject to income tax. This is a big plus for life insurance as a way to pass on money. Most of the time, your beneficiaries will get the full face value of the policy (minus any loans or withdrawals you may have made from a cash value policy) without having to pay taxes on it.

Practical Tip: When you talk to beneficiaries about the death benefit, make sure to tell them that this lump sum is usually tax-free, which means they will have more money to meet their needs.

Exceptions Where Taxes May Apply: Getting the Details

The death benefit is usually not taxed, but there are certain situations and parts of a life insurance plan that can make it taxable:

1. Interest Accrued on the Payout: If the insurance company keeps the death benefit for a while after the insured dies and before paying it out, and that money earns interest, the beneficiary will usually have to pay taxes on any interest that is earned on that held amount.

How to Avoid or Minimize: If they choose a lump sum, tell beneficiaries to claim the death benefit right away. If you choose installments or a retained asset account, keep in mind that the interest part of those payments will be taxed.

2. Estate Taxes (if applicable): Beneficiaries don’t have to pay income tax on the death benefit, but the money from a life insurance policy can be added to the deceased’s taxable estate if certain conditions are met. People with very high net worth who have a total estate (including life insurance) that is higher than the federal estate tax exemption limit (which is quite high and changes every year for inflation) should be most worried about this.

Ownership Incidents: If you, as the insured, had “incidents of ownership” in the policy at the time of your death (for example, the right to change beneficiaries, borrow against the cash value, or assign the policy), the death benefit will probably be part of your gross estate for tax purposes.

If you name your estate as the beneficiary of your life insurance policy, the money goes to your probate estate and may have to pay probate fees and possibly estate taxes.

How to avoid or lower estate taxes:

Transfer of Ownership: You can give your life insurance policy to someone else (like your spouse or an adult child) or an organization (like an Irrevocable Life Insurance Trust) to avoid paying federal estate taxes on the money. Be aware of the “three-year rule,” though: if you give someone else ownership of a policy and die within three years of the transfer, the money may still be part of your estate.

This is a common and effective way for people with a lot of money to protect their assets: an irrevocable life insurance trust (ILIT). An ILIT is a trust that can’t be changed and owns your life insurance policy.

Because the trust owns the policy and not you, the death benefit proceeds usually don’t count toward your taxable estate when you die. The trust then takes care of the money and gives it to your beneficiaries according to your wishes, without going through probate and possibly without paying estate taxes. This also helps keep an eye on payments to minors or dependents with special needs.

If you have a lot of life insurance or a lot of money, it’s a good idea to talk to both an estate planning lawyer and a financial advisor about ways to protect your legacy and lower your potential estate tax liabilities.

3. Taxable Parts of Cash Value Withdrawals and Loans

If your life insurance policy has a cash value part (like whole life or universal life), how you get to that money could affect your taxes:

Withdrawals: If you take money out of your cash value, any amount that is more than the total premiums you have paid into the policy (your “cost basis”) will be taxed as income. People call this “gain.”

Loans: You can usually borrow against the cash value of a permanent life insurance policy. As long as the policy is still in effect, policy loans are usually not seen as taxable income. If the policy ends or is given up with an unpaid loan, though, the unpaid loan amount may become taxable if it is more than your cost basis. Also, policy loans come with interest, which can lower the cash value over time if not managed.

Modified Endowment Contracts (MECs): If you pay for a permanent life insurance plan too quickly (i.e., the premiums paid are more than certain IRS limits in the first seven years), it can be changed to a Modified Endowment Contract (MEC). MECs don’t get all the good tax breaks that regular life insurance does. If you take money out of an MEC or borrow money from one, you will have to pay taxes on the gains first. If you are under 59½, you may also have to pay a 10% penalty tax on the taxable part.

Prior to withdrawing funds from your permanent life insurance plan or obtaining a loan, please ensure you are familiar with the tax regulations regarding cash value access. Talk to your financial advisor about the best ways to use your cash value that won’t cost you too much in taxes. If you’re thinking about getting a permanent policy with a lot of money, make sure it doesn’t accidentally turn into a MEC unless that’s part of a complicated financial plan.

4. Gift Tax (Very Rare):

If three different people are involved (for example, one is the insured, another is the owner, and a third is the beneficiary), and the policy pays out, it could lead to gift tax problems if the amount is large. This isn’t a problem for most family life insurance plans where the owner and the insured are the same person.

Tip: Always talk to a tax expert if you have a complicated ownership structure or a very big policy.

By knowing these tax facts, you can make sure that your life insurance policy is not only a great way to protect your money but also a tax-efficient way to keep your family safe in the long run.

The Life Insurance Plan That Changes All the Time: Why It’s Important to Review and Update It Regularly

You can’t just “set it and forget it” with a life insurance plan. Your life is always changing, with new responsibilities, milestones, and goals. Because of this, your life insurance needs will also change. To make sure your policy stays a strong, useful, and relevant safety net for your family, you need to review it and update it regularly. If you don’t do this, you might not have enough coverage, have the wrong beneficiaries, or waste your premiums.

When to Schedule a Review: Life’s Milestones and Annual Check-Ups

There are two main times when you should look over your life insurance policy:

1. Annual Review: Make it a point to look over your policy at least once a year, maybe when you plan your finances for the year or on your birthday or the anniversary of when you bought the policy. This regular checkup helps you find small problems before they turn into big ones.
2. Major Life Events: These are important things that make it necessary to look over your life insurance plan right away. One of the most common mistakes people make is to put off a review after these events.

Important life events that make it necessary to review your life insurance plan:

Getting married or divorced:

Marriage: You probably have a new financial relationship. If your spouse relies on your income or you take on joint debts (like a new mortgage), you may need to raise your coverage to keep them safe. You may also want to make your new spouse your primary beneficiary and change your contingent beneficiaries.

Divorce: You’ll need to look over your coverage again as your debts change. If your divorce decree says that your ex-spouse should not be a beneficiary, you may need to take them off the list. Make sure that child support or alimony payments are made.

Having a baby or adopting one:

This is one of the most important things that makes more people sign up. New dependents mean new financial responsibilities, like paying for their daily needs, their education, and their future costs. You will also need to name your children as beneficiaries, which is usually done through a trust or custodial account, as we talked about earlier.

Big Change in Job or Income:

Promotion or a raise: Your family’s standard of living may go up, which means you may need more money to replace it. Think about raising your coverage to match your new income level.

Job Change: If you quit your job, you will lose any group life insurance plan that your employer offers. Make sure you have your own policy or are ready to switch your coverage if that is an option.

Starting a Business: You may need to rethink your personal and business insurance needs because of new financial risks and possible changes in income.

Retirement: Your need for income replacement may go down as you get older, and your wealth may grow. You might want to look into policies that focus on estate planning or final expenses, or you might want to cut back on coverage.

Getting or paying off a lot of debt:

If you buy a new house or take out a big loan, make sure your life insurance coverage is enough to pay off the debt if you die.

Paying Off Debts: As you pay off big debts like a mortgage, you may not need as much coverage, which could let you lower your death benefit or change your policy.

Buying a big asset:

Getting big assets like a vacation home or an investment property means taking on new financial responsibilities that may need to be protected.

Changes in the health of family members:

If your spouse or child gets very sick, they may need more long-term financial help, like medical care and ongoing support. This means you should review your coverage.

Beneficiary’s Death:

If your primary or contingent beneficiary dies before you do, you need to change your designations so that the death benefit goes to the right people.

Kids Getting Their Own Money:

Once your kids are grown and able to take care of themselves, you may not need as much income replacement, which could let you lower your coverage or focus on other financial goals.

Tip: Keep all of your life insurance plan papers, such as policy numbers, agent contact information, and beneficiary designations, in a folder, either digital or physical. Tell a trusted family member (like your spouse) where this information is so they can find it. If your loved ones ever need to file a claim, this makes things easier for them.

The Review Process: What to Look For and How to Change

Here is a simple list of things to check when you look over your life insurance policy:

Reassess Your Coverage Needs: Use the DIME formula or a similar needs analysis tool to see if your current death benefit is still enough for your family’s current financial situation and future goals.

Check your beneficiaries: Are all of your primary and secondary beneficiaries still correct and up to date? Is their contact information correct? Do any of the minor beneficiaries now need help with trust planning?

Check Policy Type (if it’s permanent): If you have a permanent life insurance policy, how is the cash value doing? Are the costs fair? Does the policy still fit with your long-term financial goals?

Check your premiums: Are they still reasonable? Have they changed (for some kinds of policies)? Are there ways to lower your premiums or get a better rate?

Check your riders: Do you still need the ones you have? Are there any new riders that could improve your coverage, like an accelerated death benefit rider if you don’t already have one?

Get in touch with your agent or advisor: Set up a meeting with your life insurance agent or financial advisor. They can help you do a full review, go over your options, and make any changes that need to be made.

Tip: Don’t be afraid to ask your agent questions, even if they seem simple. They are there to help you understand your life insurance policy and help you make good choices. Take the initiative to start these reviews; your agent might not always remind you.

By regularly reviewing and updating your life insurance plan, you make sure that this important financial safety net keeps up with the changes in your family’s life, giving you strong, relevant, and ongoing protection. It’s a promise to keep your family safe for a long time and proof that you are good at managing your money.

Choosing Your Provider: Putting Your Family’s Future in the Hands of the Right Life Insurance Company

Choosing the right life insurance policy is just as important as choosing the right provider. You are giving a company control over your family’s financial future, so it is very important that they are reliable, financially strong, and have good customer service. There are a lot of good companies out there, but not all of them are the same. Some may be better for your needs than others.

Important Things to Look for in a Life Insurance Plan Provider

When you’re looking at different insurance companies for your family’s life insurance, pay attention to these important things:

1. Ratings of Financial Strength:

What it is: Independent rating agencies (like A.M. Best, S&P, Moody’s, and Fitch) assess an insurance company’s financial stability and ability to meet its financial obligations, including paying claims. Ratings usually go from “A++” (excellent) to “F” (in liquidation).

Why it matters: You want to be sure that the company will still be around to pay the death benefit many years from now. A company with a high financial strength rating is in good shape financially and can handle tough times.

Tip: Always look at the financial ratings of any company you are thinking about working with. Look for businesses that have ratings of “A” or higher (A+, A, A-) from more than one agency. Don’t just trust one agency’s score.

2. The ratio of customer service to claims is

Customer Service: How easy is it to reach the company? Do their representatives know a lot, and are they helpful? Find businesses that are known for having great customer service, clear communication, and being quick to respond.

CSR (Claims Settlement Ratio) / Complaints:

CSR: In many areas, regulators publish a Claims Settlement Ratio, which is the percentage of claims a company settles in a year compared to the total number of claims it gets. In general, a higher CSR (more than 95%) is better.

Complaint Index: In the U.S., groups like the National Association of Insurance Commissioners (NAIC) put out complaint index reports that show how many complaints a company has compared to how much of the market it owns. A complaint index of less than 1.0 means that there are fewer complaints than you would expect for its size.

Why it matters: Your family will already be having a hard time when they need to make a claim. A claims process that is smooth, understanding, and quick is very important.

Tip: Look at online reviews and databases of consumer complaints. Even though everyone’s experiences are different, a lot of negative feedback or a high complaint index should be a warning sign. Find businesses that show they are committed to making the claims process easy.

3. Features and products offered:

• Does the company have the kind of life insurance plan you need, like term, whole, universal, etc.?
• Do they have the features or riders that are important to you, like guaranteed insurability or an accelerated death benefit?

Do their rules fit with your long-term financial goals and how much risk you are willing to take?

4. High-end competition:

• Price is important, but it’s not the only thing that matters. Get quotes from different companies for the same amount of coverage, term, and type of policy.

Tip: Use online comparison tools or hire an independent insurance agent (broker) who can look around for you with different companies. Be careful of quotes that are much lower than others, and make sure you’re comparing policies that are really similar.

5. Agent Quality and Help:

If you hire an agent, make sure they know a lot, are honest, and have your best interests at heart. A good agent will listen to what you want, explain your options clearly, and not push you to buy a certain product.

Helpful Tip: Find an agent who has good reviews or recommendations. Don’t be afraid to ask for more information or to ask questions.

Some of the best life insurance plan providers (these are just examples, not recommendations)

Some companies often make “best of” lists because they have a good reputation in the market, are financially strong, and offer a wide range of products. These are just examples of the kinds of companies you might want to think about. They are not specific recommendations, because the best choice for you will depend on your own situation:

Nationwide: People often say good things about them because they have a lot of different products, are financially stable, and keep their customers happy. They have a lot of different choices, like life insurance for kids.

Banner Life (Legal & General America) is often praised for having low term life insurance rates and high financial ratings, which makes them a popular choice for simple term coverage.

SBLI: Offers term life insurance at a low cost and has happy customers, along with useful online tools.

Pacific Life: Known for its wide range of universal life insurance plans and strong offerings in that area.

MassMutual and Lafayette Life are known for their whole life insurance products and high financial ratings.

Penn Mutual and Symetra are known for their no-medical-exam options, which make the application process easier.

People often talk about Thrivent’s great financial strength and customer satisfaction, especially in faith-based communities.

Tip: Don’t just pick a company from a “top 10 list.” Use these lists as a starting point for your research, but always check the financial ratings, complaint ratios, and policy details that are important to your family.

Useful Tips for Making Your Life Insurance Plan Part of Your Daily Life

Picking out and buying a life insurance policy is a big step, but its true value comes from how well it fits into your family’s overall financial picture and how well the people it protects understand it. Here are some useful tips to make sure your life insurance plan works as well as possible and gives you the most peace of mind.

1. Plan your premiums carefully

Make it a Non-Negotiable Expense: Don’t think of your life insurance premiums as an optional bill; think of them as a necessary monthly cost, like your mortgage or utility bills. You are investing in the safety of your family in the future.

Set up automatic monthly or yearly premium payments from your bank account. This makes sure that payments are never missed, policies don’t lapse because of mistakes, and coverage is always in place.

Include in Your Budget: Set aside a certain amount in your family budget for insurance premiums. This helps you keep track of the cost and makes sure you don’t spend too much money. Check out our “Mastering Your Household Finances” resource for tips on how to keep your budget in check.

When you first make a budget, try to get a premium quote that is comfortably within your means, even if it means changing the amount of coverage you want a little bit. It’s better to have affordable coverage that stays in place than a big policy that ends.

Two. Tell Your Family About the Life Insurance Plan

Let Them Know It Exists: It’s very important that your beneficiaries (or a trusted family member, like your spouse) know that you have life insurance and where to find the policy information. Unclaimed life insurance benefits are a real problem, and it’s often because family members don’t know the policy exists.

Talk to your spouse or adult children about why you have the policy, how much coverage it gives you, and what it is meant to cover (for example, your mortgage, college, or income replacement). This openness helps people understand and lowers their stress.

Give Important Information: Tell them the name of the insurance company, the policy number, and how to reach your agent or the company’s claims department.

Tip: Make a binder or a secure digital folder for your “Family Financial & Important Documents.” Include the details of your life insurance policy, the name of the servant, and instructions on how to get to it. Let your family members know where this binder is and how to get to it.

3. Make sure your documents are safe and easy to get to.

Safe Storage: Keep your physical policy documents in a safe, fireproof place at home, like a home safe or a secure file cabinet.

Digital Backups: Use a secure, cloud-based storage system (like an encrypted cloud drive) with the right access controls to scan and save digital copies of your policy documents.

Share Access: Make sure that someone you trust (like your spouse, an adult child, or your estate executor/attorney) knows where your policy documents are and how to get to them in case of an emergency. This goes along with teaching your family.

Useful Tip: Don’t depend only on online portals. Having physical or easily accessible digital copies is helpful because it makes sure you can still access them even if there are technical problems or the company’s online system changes.

4. Talk to a financial advisor on a regular basis.

Expert Help: A qualified financial advisor can help you a lot with your life insurance. They can assist you with:

Use detailed financial analysis tools to accurately figure out what your family needs.

Look at policies and companies from an objective point of view.

Include your life insurance policy in your overall financial and estate plan.

As things change in your life, read over and update your policy.

Explain how complicated tax laws or trust structures work (like ILITs).

Life insurance is just one part of your financial puzzle. An advisor makes sure that it fits with your investments, retirement planning, savings goals, and estate plan.

Tip: Look for a fee-only or fee-based financial advisor who has a legal duty to act in your best interest. Look for people who have certifications like Certified Financial Planner (CFP®). They can give advice without the pressure to buy that comes with commission-only agents.

5. Keep Up with Your Policy

Read Your Mail: Open and read all of the mail and emails that your life insurance plan provider sends you. These messages often have important news, like annual statements (especially for cash value policies) or information about changes to your policy.

Understand Statements: If you have a permanent policy, you should know what your annual statement means. It usually shows how much cash value has grown, how much you owe on loans, and what fees and costs you have. Call your agent or the company if you have any questions.

Useful Tip: Think of your yearly life insurance statement as a bank statement. Make sure to read it carefully to make sure that everything is as it should be and that your policy is working as it should.

You can turn your life insurance policy from a passive document into a powerful, living tool that helps keep your family safe and healthy for the long term by actively managing it and making it a part of your daily financial routines. This proactive involvement makes sure that your carefully chosen life insurance plan will keep its promise to protect the people who matter most when the time comes.

source:

https://www.investopedia.com/terms/l/lifeinsurance.asp (General Life Insurance overview)

https://www.nerdwallet.com/insurance/life/life-insurance-policies (Life Insurance: How to Find the Right Policy for You)

https://www.nerdwallet.com/insurance/life/life-insurance-quotes (Compare Life Insurance Quotes)