If you’re thinking about buying life insurance, it helps to know some basics. Here are fast answers to common life insurance questions.
Q: What is life insurance?
A: It’s insurance that pays someone after you die.
Q: Who gets the payout?
A: The person(s) you name as beneficiary on the policy.
Q: Do I need life insurance?
A: Yes, if your death would hurt someone financially.
Q: When should I buy it?
A: Usually when you have a spouse, a mortgage or kids.
Q: How do I figure out how much life insurance I need?
A: Add up present and future financial obligations and subtract assets.
Q: What’s an example of the cost for a term life policy for $1 million for 20 years?
A: For a healthy woman age 30, about $350 a year.
Q: Can I buy life insurance on an adult family member?
A: Yes, with that person’s consent.
Q: What causes of death are covered on a life insurance policy?
A: All causes, except suicide in (typically) the first two years.
Q: What is term life insurance?
A: A temporary policy that covers a specific time period.
Q: How long does a term life policy last?
A: You choose: 10, 20 and 30 years are common options.
Q: If I have term life insurance, what happens to the money I’ve paid if I’m still alive at the end of the term?
A: The insurance company keeps it (unless your policy refunds it).
Q: How would I get coverage that refunds my premiums if I don’t die?
A: You pay extra for return of-premium term life insurance.
Q: What’s good about term life insurance?
A: It provides simple, relatively inexpensive coverage for a specific period.
Q: What is permanent life insurance?
A: A policy, with cash value, that lasts your entire life.
Q: What’s life insurance “cash value”?
A: It’s like a savings account within permanent life insurance.
Q: What is whole life insurance?
A: It’s the simplest form of permanent life insurance.
Q: What’s good about permanent life insurance?
A: It provides coverage no matter when you die.
Q: What’s the downside of permanent life insurance?
A: It’s expensive and many people don’t need permanent coverage.
Q: What if I buy term life and decide later I need whole life?
A: Many term life policies are convertible to permanent coverage.
Q: What can you do with life insurance cash value?
A: Withdraw or borrow money, or surrender the policy for cash.
Q: Can I take money out of a term life insurance policy?
A: No, term life has no cash value.
Q: How do I get a good deal on a life insurance policy?
A: Compare life insurance quotes from several insurers.
Q: Do I have to take a life insurance medical exam when I apply?
A: With many companies, yes, if you want the lowest rates.
Q: What affects life insurance rates?
A: Your age, gender, health, smoking and coverage choices.
This article was provided to The Associated Press by the personal finance website NerdWallet . Email staff writer Barbara Marquand: email@example.com . Twitter: @barbaramarquand.