Life insurance is something most of us need -- but choosing the type, terms and amount of life insurance can be daunting. Do you want term life insurance, or universal? Is a higher premium better? Do you really need a $1 million dollar life insurance policy?

Today we're explaining everything you need to know. Sit back, grab a cup of coffee and peruse our ultimate guide to life insurance!

Types of Life Insurance

The two major types of life insurance are term life and permanent life (such as whole life insurance). For the majority of consumers, term life insurance is the most suitable choice. Term insurance covers you for a set amount of time, and the payout can be used to cover any expenses in case you die. Term life insurance quotes are also the most affordable among all life insurance policy types.

How much do I need?

The policy value is how much the policy is worth; ie, what the payout is in the event of death. Life insurance companies use life expectancy as the basis for determining quotes. Anything that could shorten your life expectancy will typically lead to a higher price. This includes factors such as age, gender, lifestyle and family history.

What goes into a policy:

There are three parties named in a life insurance policy:

  • Policyholder: The person who owns the policy and makes payments on the premium.
  • The Insured: The person named in the life insurance policy whose life is insured. The policy is paid out in the even of the insured's passing.
  • Beneficiary: The person named in the policy to receive the payout. Typically a spouse or child.

  • Who needs life insurance?

    Arguably, everyone needs life insurance (exceptions are when a couple has enough assets to provide for themselves should one person pass away, and when the aforementioned couple has self-sufficient adult children). Groups with the most need for life insurance are families: young families, single-parent families, single-income families, families with a mortgage, families of children with special needs.

    As always, if you have any questions regarding your life insurance policy, please give us a call!

    Sources: Forbes, When Don't You Need Life Insurance | NerdWallet, A Guide to Who Needs Life Insurance and Life Insurance.
    Image credit: Kat Grigg
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