Investopedia: What Is Life Insurance?

Life Insurance is a contract between you and the insurer in which the insurance company promises to pay a sum to the beneficiaries named in the policy when you die. Investopedia has evaluated many companies that offer different types of life insurance, looking for financial strength, customer satisfaction, and several policy options, including riders. Click the to learn more.

Peace of mind is a feeling of calm and tranquility, an internal anchor that keeps you grounded despite the chaos of life. It’s a state of well-being that can be hard to find, but it’s also something that isn’t easily taken away.

You can protect your peace of mind by avoiding stress, being kind to yourself, and focusing on the good in your life. You can also help your family members protect their peace of mind by providing them with a financial safety net in the event you pass away unexpectedly. Life insurance is an affordable way to provide this protection, ensuring your loved ones can cover funeral expenses, ongoing bills, debts, childcare and more.

A life insurance policy will pay out a lump sum to your beneficiaries upon your death, providing them with the financial support they need to carry on. This can help them pay the mortgage, maintain their current standard of living and cover other costs associated with your loss, such as lost income, funeral expenses and college tuition.

Life insurance can also be used to provide additional coverage for things like chronic illness, accidents and disability. Riders are available for most life insurance policies to allow you to customize your policy to fit your unique needs and to help ensure that your loved ones will be covered if the worst should happen.

If you want to learn more about protecting your peace of mind and creating a secure financial foundation, contact us today. Our team of licensed agents can help you select the right life insurance coverage to meet your individual needs and provide you with the peace of mind you deserve.

Quility offers a range of life insurance options including term and whole life. You can get a quote in 10 minutes or less, apply online or over the phone, and receive your policy in just a few weeks. Coverage starts at $18/month, premiums are flexible and you can acquire up to $1M in coverage. Learn more about life insurance at Quility today!

Funeral Expenses

With the cost of funeral expenses on the rise, it is important to think about ways to protect your funeral funds. You can do this by setting up a savings account earmarked for funeral expenses or a final expense insurance policy (also known as burial insurance). These policies pay a death benefit – usually between $10,000 and $25,000 – to your beneficiaries upon your passing, and the benefits can be used to help cover the costs of end-of-life expenses such as funeral costs, but they can also be used for other expenses such as travel for family members, outstanding debts, or other financial needs.

You can also prepay for your funeral expenses in advance with a prepaid funeral plan, which is typically an agreement between you and a funeral home that details the items and services you want to purchase. The plan is structured on a payment schedule, such as one to ten years, and the payments are often made in installments that fit your budget. The funds in a prepaid funeral plan are protected by a specialized insurance company, and you can transfer the plan to another funeral home if needed.

The other option for protecting your funeral expenses is to purchase a life insurance policy. However, the Funeral Consumers Alliance, a death-care industry watchdog group, warns that purchasing a traditional whole life insurance policy or a preneed insurance plan to cover funeral expenses can be expensive. In addition, the group cautions that these policies do not provide sufficient protection from rising funeral costs.

A more affordable alternative is a prepaid funeral plan. These plans can be purchased from a funeral home or other authorized provider, and they can include a basic service fee, casket or cremation, burial plot, headstone, and obituary notice. You can also select optional items such as add-on services, visitation and viewing, or catering for the funeral service.

Finally, you can obtain a burial or funeral loan from some financial institutions. These loans are secured by your home or other assets and typically offer a lower interest rate than credit cards or personal loans.

Education Expenses

The cost of education has soared over the years, and it can take many years to save enough to pay for a child’s college tuition. Life insurance can help to make that possible. It can also protect against financial ruin caused by education-related debts, which can be crippling for families and have a negative impact on their credit scores.

In addition to tuition, students must consider a variety of other expenses, including books, supplies, and equipment that are necessary for the course. These expenses are also eligible for tax deductions and credits, such as the American Opportunity Credit and the Lifetime Learning Credit. They do not include tools and supplies that are retained by the student, travel expenses or education involving sports, games or hobbies (unless it’s part of a job-related program).

Generally speaking, any accredited postsecondary institution qualifies for these deductions and credits, regardless of whether it is public, private, nonprofit or for-profit. The institution must be on the Free Application for Federal Student Aid (FAFSA) code list and have faculty, curriculum and a student body.

The amount of tuition you can deduct is based on your income, with the maximum deduction at $4,000. If you’re using your 529 savings plan to pay for qualified education expenses, money that’s withdrawn from these accounts can be used for qualifying education costs without any tax penalty. However, it’s important to note that these withdrawals can reduce the value of the account by reducing the amount available for future educational expenses.


Your debts can be paid off when you die by whole life insurance policies that pay a death benefit in an amount equal to your outstanding debt, up to policy maximums. This can cover personal and other loans; debts owed to credit unions, finance companies and retail outlets selling high priced items on a installment basis; bank credit and revolving check loans; mortgages; and more.

Some whole life policies also pay dividends, which are shares of a mutual company’s divisible surplus that are declared and paid to eligible policyholders. These are not guaranteed, but New York Life has paid them every year since 1854. However, because of the home collection feature in debit life insurance and its higher lapse rates, debit policies typically cost more than regular policy sizes issued for the same face amount.

Variable Life

A variation of permanent life insurance, variable life policies include a cash value component that allows the policyholder to choose how that money is invested. This flexibility comes at a cost, however. Since the policy is more closely tied to investments, there is a greater chance of losing money than with other types of permanent life insurance.

Like whole and universal life, a variable life policy pays out a death benefit when the owner dies. The amount of that payout is determined by the cash value account’s performance and the underlying investments chosen by the policyholder. Because of this added risk, the premiums for a variable life insurance policy are often much higher than for other types of permanent coverage.

The money in a variable life policy’s cash value account grows on a tax-deferred basis, similar to money in a retirement account. If the investment performs well, you may be able to withdraw funds or borrow against them. However, you’ll need to keep in mind that the amount of money you withdraw will be reduced by the costs and charges associated with the policy, as well as surrender fees.

When choosing a variable life insurance policy, look for a company with a high financial strength rating from ratings agencies such as AM Best and Moody’s. Also, it’s important to understand the guaranteed parts of the policy (e.g., the death benefit) as well as its potential worst-case scenario in case the investments tank.

Because of the risks involved, variable life insurance is only appropriate for those who can afford to pay high premiums and are financially prepared to take on investment risk. For most people, a term life policy with a savings component is the better option.