two men laugh and enjoy time together after reading about life insurance options

Life Insurance 101: What You Need to Know

Setting your family up for financial peace of mind is smart at any stage of your life. And when it comes to life insurance, understanding the basics can help you plan today for the uncertainties of tomorrow.

Life insurance is a simple way to ensure your beloved family and friends will be taken care of in the event of your passing. It can replace income for dependents, cover funeral costs or end-of-life care, pay for educational expenses or even provide contributions to your favorite charities.

But most of all – it helps protect your loved ones in case of the unexpected. In fact, life insurance is most commonly used to:

Stress for Loved Ones
Off Mortgages
Expenses and Debts
With Estate Planning

Pro Tip:

Every individual and every situation is unique. But in general, the younger you are at the time you take out a policy, the less expensive it will be. So even if there’s not an immediate need at your age, taking out a policy while you’re young might help you avoid higher rates in the future. It may also be useful, in case of a not-yet-apparent health condition that may prevent you from obtaining as much coverage as you’d like one day.

Understanding the Basics

There are different types of life insurance policies, so to best understand what you need, let’s start with the key definitions:

  • Named Insured

    This refers to the person who purchases the life insurance and is specifically named on the policy’s declarations page as the insured party. In the event of this person’s passing, payment would be directed to any selected beneficiaries.

    It’s important for the named insured to consider which loved ones need to be protected financially if they pass away. This is the first step to better understanding how to assemble individuals on the policy.

  • Beneficiary

    If the named insured passes away, the beneficiary refers to anyone who is set up to receive payment and be taken care of, financially, after the named insured is gone. There can be multiple beneficiaries for a policy.

  • Insured Amount

    This is the amount of money that would be paid to the beneficiary (or beneficiaries) in the event the named insured passes away.

    When it comes to life insurance, most professionals recommend at least two years’ worth of income as a starting point when planning for your coverage amount. You can also use a handy online calculator to estimate how much life insurance may be best for you and your family.

  • Term

    This type of life insurance guarantees payment if the named insured passes away during a specified time period. This policy is often outlined in increments of five years, but it can be annually renewed. Once a term expires, the policyholder can either renew it for another term or allow the policy to terminate.

Pro Tip:

Talk to your local advisor, or feel free to contact Gate City Insurance Agency if you’d like any assistance with understanding or comparing rates for different policy options.

As your life and job situations change over time, remember – experienced insurance advisors can be wonderful resources to help you make the best decisions to financially support your loved ones. Plus, they can personalize your policy, based on your comfort level with premiums as well as your expectations for the future of your beneficiaries.

Discuss your needs, and ask questions to find the right fit for you – and for the ones you love!

Products and services offered through Gate City Insurance Agency are:

Not a Deposit Not Insured by the FDIC or Any Federal Government Agency Not Guaranteed by Gate City Bank May Lose Value