As we've been discussing, September is Life Insurance Awareness Month—and since we’re at the tail end of it, consider this a friendly “wrap-up” and nudge to take another look at your coverage.
Life insurance isn’t the most exciting topic (I get it), but it’s one of those foundational pieces of a solid financial plan. And because policies—and people’s needs—can change over time, a periodic review can prevent unpleasant surprises.
Here are a few things many folks don’t realize about life insurance.
1) Not all policies are built the same (and that matters)
Life insurance gets discussed as if it’s one product. It isn’t. Policies differ widely, and the best fit depends on what you’re trying to protect.
Term life insurance generally pays a death benefit if you pass away within a specific time period—often 10, 20, or 30 years. Because it’s typically designed to cover a set window of need (for example, while a mortgage is high or kids are still dependent), it’s often the most cost-effective way to purchase a larger death benefit.
Permanent life insurance (commonly whole life or universal life) is designed to provide coverage for your entire life, as long as you keep the policy in force and premiums are paid. Permanent policies generally cost more than term because they’re not limited to a set timeframe and they include a cash value component.
A practical way to think about it:
- Term is often about protecting income replacement needs for a period of time.
- Permanent is often about covering needs that may persist later in life (legacy goals, estate planning needs, funding a survivorship lifestyle, charitable gifting, or leaving money for a spouse or dependent).
2) Whole life vs. universal life: similar category, different “controls”
Two common types of permanent insurance are whole life and universal life. Both can build cash value, and both may offer ways to access that cash value during your lifetime—but how each policy works can be very different.
Whole life typically features:
- Level premiums (they’re generally designed to stay the same)
- Cash value that grows according to the policy’s terms (some aspects may be contractual guarantees, depending on the policy)
- A structure that many people find easier to understand because it’s less flexible—but that simplicity can be a feature
Universal life generally offers more flexibility, such as:
- The ability to adjust the death benefit (subject to underwriting and policy rules)
- The ability to increase, reduce, or sometimes pause premium payments, as long as there is sufficient policy value to cover ongoing costs
With both types, it’s important to understand how policy loans or withdrawals may work.
- You may be able to borrow against or withdraw from the cash value.
- Loans and withdrawals can reduce the death benefit and may cause the policy to lapse if not managed properly.
- Tax treatment may depend on how the policy is structured and how it’s funded.
One point that surprises people: in many cases, beneficiaries do not receive “unused cash value” on top of the death benefit. Often, the cash value is essentially part of how the policy is funded behind the scenes, and the benefit paid is the death benefit amount (subject to policy terms). Because this varies by contract, it’s worth reviewing the specifics.
3) Many people overestimate what life insurance costs
A common reason families put off coverage is simply cost assumptions. Many people think life insurance is far more expensive than it actually is—especially for term coverage.
To give a general example (and keep in mind pricing varies by insurer, health, location, and underwriting):
- A healthy 30-year-old male might find a $500,000 20-year term policy priced around $221 per year on average.
- If that same person waits until age 50, average pricing might be closer to $817 per year.
- Women often see lower premiums than men for the same coverage, all else equal.
The bigger takeaway is not the exact number—it’s the pattern: age and health changes can make insurance notably more expensive later. If coverage is needed, earlier planning can expand options.
And if you already have coverage, it can still be useful to review whether it matches today’s needs. Many people buy life insurance when life looks one way—then careers change, families grow, debt changes, and retirement gets closer.
4) A health condition doesn’t automatically mean “no”
Another misconception: “I have a pre-existing condition, so I can’t get life insurance.”
That’s not always true.
Underwriting may involve additional screening, and premiums may be higher depending on the condition and severity. But many people with conditions such as high blood pressure, high cholesterol, asthma, or anxiety may still qualify—especially if the condition is being managed with treatment and consistent follow-up.
Even if you were declined in the past, or quoted an unfavorable premium, it may be worth revisiting. Underwriting guidelines can differ between insurers, and your own health profile may have improved over time.
Bonus: Riders can add useful options (when appropriate)
Riders are add-ons that can be attached to some policies to expand features or coverage. Not every rider is necessary, and costs/availability vary, but some commonly discussed examples include:
- Accelerated death benefit riders that may allow access to some death benefits in the case of a qualifying terminal illness
- Waiver of premium riders that may keep coverage in force if disability causes loss of income (subject to policy terms and definitions)
- Long-term care or chronic illness-related riders (often with specific rules, limitations, and costs)
- Guaranteed insurability riders that may allow additional coverage later without new medical underwriting (subject to contract rules)
This is where it pays to read the fine print—riders can be helpful, but they’re not all created equal.
A simple end-of-month checklist
If you haven’t looked at your life insurance in a while, here are a few questions worth asking:
- Who relies on your income today? (Spouse, partner, children, aging parents?)
- What would need to be paid off immediately? (Mortgage, debts, final expenses)
- Has your coverage kept up with your life? (New home, new job, business, divorce, remarriage, college plans)
- Are your beneficiaries up to date? (This is more important than many people realize.)
We can help you evaluate what you have—and what you actually need
If you’d like help estimating how much life insurance you may need, or reviewing whether your current coverage is still appropriate, please contact our office. We can help in a few ways: we can handle your insurance needs directly through our office, coordinate with your existing insurance agent, or recommend an agent to work with you.
Either way, a quick review now can bring a lot of clarity—and peace of mind—going into the final stretch of the year.