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Basics of life insurance explained

With many options to choose from, it's very important to understand the different types of life insurance and tips for selecting coverage. Take some time to research all of the available options so you can make an informed decision.

Whether you're buying a car, appliance, or even a new pair of running shoes, most of us take the time to do a little bit of homework before making important purchases. Life insurance is no different. Understanding the different types of life insurance that are available and how to get coverage that is right for you is an important part of doing research. In fact, if you're in the beginning stages of shopping for a life insurance policy, you may feel a bit overwhelmed by the process - especially if you're not familiar with this type of protection. That is why Protective is here to help explain life insurance. From the many different types of life insurance, to finding the best life insurance company, there is a lot of information to take in before you feel like life insurance has been explained.

In this article, we'll educate you with five life insurance “need to knows” that can help get you up to speed on some important life insurance basics and hopefully, that much closer to finding the coverage you need - all without having to step into a classroom!

  1. Educate yourself on what type of life insurance is best for you
    There are basically two main types of life insurance - term and *permanent. To determine which may be best in your situation, you need to understand the difference between the two. A level-premium term life insurance policy generally provides coverage for a limited period of time, typically five to 30 years. When the initial term is over, you can continue the policy. However, the premiums are likely to increase. A permanent life insurance policy (such as whole, universal and variable universal life) are designed to provide coverage until you die, as long as you continue to maintain your required premium payments. Because of this lifelong coverage, permanent life insurance rates are typically higher than term rates. You may want to learn more about evaluating term vs. permanent life insurance.
  2. Know how much you can comfortably afford
    Maintaining your life insurance is contingent upon your ability to make your required premium payments. How much you'll pay depends on the type of policy you buy, your overall health, and many other factors. A good rule of thumb would be to buy as much coverage to meet your needs and can comfortably afford. Typically, you'll have the option of paying monthly, quarterly, or on an annual basis. If you want a quick way to estimate how much life insurance you may need, visit Protective's Needs Calculator.
  3. Understand your beneficiary options
    The beneficiary of your life insurance policy is the person(s) who will receive the death benefit when you die. Whatever type of life insurance you apply for, the insurance application will require that you name a primary beneficiary. Can't decide? Then you have the option of splitting the benefit, say, if you have more than one child. It's also smart to name a contingent beneficiary in the event that your existing beneficiary dies before you do.
  4. Be prepared for your medical exam
    Whether or not you will undergo a medical exam depends on many different factors, including the type of life insurance policy you buy and the amount of the death benefit. Because you may be required to undergo a medical exam, it's best to be prepared by getting as healthy as you can. This could mean dropping a few pounds or even quitting a bad habit such as tobacco use. You may have the option of seeing your own primary physician, or requesting that a paramedical examiner come out to your home or office.
  5. Learn how to shop for coverage
    When you're ready to go policy shopping, you can make an appointment with a local agent, contact a reputable life insurance company, or do some comparison shopping online. But as the saying goes, you get what you pay for. It's perfectly fine to get a quick online quote, but you may want to be particular about the companies that you select. You want to be certain that the insurer has a longstanding reputation for being financially secure and that if a claim is made, the company will be there for your loved ones. If you have questions (policy, billing, or even general customer service issues) or need to review your policy, it can be important to get the help you need when you need it.

For more information on these and many other life insurance basics, visit the Protective Learning Center, where you can have the basics - and the more complex parts - of life insurance explained to you.


*As long as required premium payments are timely made.



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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.