Life Insurance 101
What is Life Insurance?
Do you know the right answer?
If you've never looked into
life insurance, sifting through the abundance of information can feel overwhelming. Here we give you the basics.
Get the information you need to make the best decision for your situation, your budget, and your family's future.
What is Life Insurance
Are you the "breadwinner" for your family? What would happen if you suddenly couldn't provide for them anymore?
Life insurance takes this genuine worry off your plate, giving you peace of mind knowing your loved ones are financially protected. An active life insurance policy ensures your family receives a lump-sum benefit upon your death. They can use this money to pay for your funeral arrangements as well as mortgage or rent payments, tuition fees, and any other living expenses.
Each Policy Includes Four Parts
Named Insured
This is typically the person who's covered by the policy and responsible for premium payments. However, it's possible that someone other than the named insured owns the policy and makes payments.
Beneficiary
The person or persons, institution(s), or entities that receive the benefit payment when the named insured dies. When you create your policy, you can name one or more beneficiaries depending on your situation.
Premium
The monthly payments that keep the policy active. Paying your premiums ensures there's no lapse in benefits.
Death Benefits
The money that's paid to beneficiaries when the named insured dies. Normally, these benefits aren't subject to taxation and the beneficiary(ies) typically receives funds in one complete payment.
Do I Need Life Insurance?
If something were to happen to you, your family doesn't lose just you — they lose everything you provide. Whether you're providing a stable income in your household or you're a caregiver for someone in your family, you need to ensure they're taken care of in the event of your passing.
You might want to look into Life Insurance if you fall into any of these categories:
- Parent
- Head of household
- Stay-at-home parent
- Divorced parent
- Married couple
- Homeowner
- Retiree
- Caretaker
- Student
- Business owner
Some of these categories overlap, which is all the more reason looking into life insurance now is not only in your best interests but in the best interests of your loved ones.
How Much Coverage Do I Need?
Shopping for life insurance isn't the same as, say, shopping for clothing — one size clearly doesn't fit all.
Everyone's situation is unique. What are your current assets? How much debt do you have? What plans do you have for the future?
You can use our convenient online coverage calculator to assess your requirements based on your distinctive needs.
Use these guidelines to estimate a coverage amount that works for you:
One way to come up with a general coverage amount is by multiplying your current net income by 10.
Alternatively, you can use the "DIME" method for a more detailed breakdown. DIME stands for:
Debt — How much do you currently carry in debt, not counting your mortgage? Include your final expenses, as well.
Income — Multiply your annual net income by how many years you expect your family to need support.
Mortgage — How much do you still owe on your home?
Education —
How much will it cost to send all of your children to college?
Choosing Length Of Coverage
When deciding how much life insurance you need, it’s just as important to think about how long the coverage should last.
- If you want protection that
never expires, permanent life insurance is the right fit. It stays in force for your lifetime and can include valuable benefits, such as cash value accumulation and living benefits for chronic or critical illness.
- If you only need coverage for a
specific period of time — for example, during your working years — term life insurance may be the better choice.
When selecting a term length, many people align their policy with major financial milestones, such as:
- The date your mortgage will be paid in full
- The year your children are expected to graduate college
- Your target retirement age
- When you expect to reach your long-term savings goals
At Biaggi Life, our goal is to help you choose the coverage length that best protects your family while staying aligned with your financial plan.
Permanent vs. Term Life Insurance
| Feature | Permanent Life Insurance | Term Life Insurance |
|---|---|---|
| Coverage Length | Lifetime protection with no-lapse guarantees (to age 90, 100, or even 120) | Fixed period (10, 20, 30 years, etc.) |
| Premiums | Can be structured with minimum premiums, sometimes comparable to or lower than term | Typically lower short-term cost, but expires at end of term |
| Cash Value | Optional cash value accumulation depending on policy design | No cash value — pure protection only |
| Living Benefits | Access up to 80% of death benefit for chronic, critical, or terminal illness | Limited riders may be available, but usually less comprehensive |
| Best For | Long-term financial security, legacy planning, covering lifetime risks | Temporary needs like paying off a mortgage, raising children, or income replacement during working years |
You might want to look into Life Insurance if you fall into any of these categories:
Life insurance carries several benefits depending on your unique situation. Consider this:
- Parent - Provide for your children
- Head of household -Ensure your family is taken care of
- Stay-at-home parent - While you might not be a breadwinner, there are things you provide that your family will be without when you die.
- Divorced parent - Help ensure the other parent has the resources to finish raising your children.
- Married couple - Ensure your spouse has the means to survive when you pass away.
- Retiree - Helps cover your final expenses.
- Homeowner - Make certain your home remains in your family and isn't foreclosed upon because your family couldn't make the mortgage payments.
- Caretaker - Provides the money needed to find care for a loved one.
- Student - If you carry student loan debt, it doesn't necessarily get forgiven when you die. Life insurance can help pay off your outstanding debts so your family doesn't have to.
- Business owner -
Ensure your business isn't liquidated when you pass away.
Which form of life insurance should you choose?
Permanent life insurance, also known as whole life insurance, offers coverage with no expiration date as long as you pay your premiums. With our affordable plans, this could be the perfect option for you.
Choosing Length Of Coverage
Life insurance has changed. Today’s policies go beyond the old “cash value” model and offer flexibility, living benefits, and guaranteed protection.
- Permanent Life Insurance can now be designed with minimum premiums that rival or even undercut term rates in many cases. You can also select guaranteed no-lapse coverage that lasts to age 90, 100, or even 120 — ensuring your policy never expires as long as you choose.
- Many modern policies include living benefits riders. These allow you to access up to 80% of your death benefit if you face chronic, critical, or terminal illness — providing funds for nursing home care, medical expenses, or simply easing financial stress while you’re still living.
- Term Life Insurance
still has its place when you only need coverage for a set number of years — such as until the mortgage is paid off, your children finish school, or you reach retirement. It’s typically more affordable in the short term but offers no lifetime guarantees.
Term Life Insurance
Term life insurance is meant for just a certain portion of your life. As long as premiums are paid, the coverage remains in effect for the length of the term. Once the term expires, you no longer have life insurance unless you opt to begin another term.
