Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent Benji Carr

UPDATED: Jun 28, 2022

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The Facts of Life

  • Life insurance can help take care of financial needs after you pass
  • Because it’s larger than most could give at one time, it can also be used to provide an inheritance or charitable donation
  • Make sure you’re honest with your insurer, or you risk them not paying out

What does life insurance cover? Life insurance could cover whatever costs your loved ones might have to pay after you die. Whether it be a short-term life insurance policy or whole life, you can likely find the coverage you need to give you peace of mind about your loved ones’ futures.

What does affordable life insurance cover? Enter your ZIP code into our free quote tool to understand what an affordable death benefit looks like.

What will life insurance cover?

Life insurance will provide a death benefit to your loved ones if you continue to pay your premiums. They can use this death benefit however they wish, perhaps paying for college or just staying solvent after losing a primary income earner.

Life insurance could be a great tool to save your loved ones from being affected if they were to lose you. It can also be something as simple as paying for your burial and final expenses.

What types of deaths are covered under life insurance?

Believe it or not, there are circumstances in which life insurance won’t pay out, even if you’ve been paying your premiums. However, these circumstances mostly have to do with lying or misleading the life insurance company.

That being said, some deaths covered under your life insurance policy will likely include:

  • Death due to illness
  • Accidental death
  • Homicide (pending clearance)
  • Death in a natural disaster

Almost every death caused by something other than the insured or their beneficiaries will be covered by a life insurance policy. Some insurers will even give you an added benefit if the death occurs because of an accident, assuming you have the right rider.

What isn’t covered by life insurance?

As previously mentioned, life insurance won’t cover deaths that occur under certain circumstances, such as those that could have been prevented. For instance, some of the deaths that life insurance won’t pay out the total amount for, or won’t pay out on at all, include:

  • Suicide (partial, depending on policy age)
  • Drug or alcohol overdose
  • Dangerous job or activity that you didn’t disclose
  • Murder by beneficiary

These are circumstances that could have been prevented or circumstances the life insurer deems suspicious. Of course, the insurer won’t appreciate being misled or lied to, so you can expect a claim to be denied if dishonesty is discovered.

How quickly does a life insurance policy pay out?

How quickly your life insurance pays out will likely depend on several factors. Under some conditions, there may be a waiting period while everything gets sorted out. For instance, if the insured is missing, the claim may not be paid for quite a while.

In most cases, an insurer should pay out rather quickly to help your loved ones pay for your funeral and other necessary costs. If you know that you’re a beneficiary and the insured person dies, contact the insurance company right away to get the claim started.

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What is life insurance?

Life insurance can be a great tool to provide financial support to your loved ones after you pass. If you’re the primary income earner or have a lot of debt that will come due, a life insurance policy can help take care of these sudden costs.

In some cases, life insurance can work as a vehicle for inheritance, providing more money through the policy’s death benefit than you would’ve been able to give straight from your estate.

How does life insurance work?

A life insurance policy will provide your assigned beneficiaries with a pre-approved death benefit when you die as long as you continue to pay your premiums. When you pass, your beneficiary will receive the agreed-upon amount once the insurer has verified your death.

The tax-free payout (and the financial security that comes with it) is the biggest benefit, but there are other advantages, such as the option to use your policy as a savings account.

How do I know if I need life insurance?

There are a wide variety of circumstances in which you could benefit from life insurance. For example, if you’re worried about someone being affected financially by your passing, you can use the death benefit to ensure that your loved ones are taken care of.

Here are some potential situations in which life insurance would be beneficial:

  • Supporting a young family after the death of a primary earner
  • Keeping a small business afloat after the death of an investor or partner
  • Making a large charitable donation
  • Establishing an inheritance fund

As previously mentioned, life insurance can help keep a family or small business owner going if they lose a significant earner. It can also be used as a large charitable donation or gift that is more than you can afford to give during your life.

What are the types of life insurance?

Life insurance types will vary according to the insurance company and depending on state law. According to the Insurance Information Institute, the two main types of life insurance are permanent and term life insurance.

What is term life insurance?

Standard term life insurance is often regarded as one of the most straightforward and affordable types of life insurance. However, because it only lasts for a period of your life, the insurer won’t pay out anything if you outlive a standard term life insurance policy.

Some insurers will offer variations on the standard term life insurance policy to allow for customization. Some various policy subtypes include:

  • Standard term – With a typical term insurance policy, you can get insurance for a period of time, usually in increments of five or 10 years.
  • Renewable term – Renewable term allows you to renew your coverage to a certain age at the same rates as when you first applied.
  • Return of premium – If you don’t like losing out entirely on your investment, this policy will return a portion of your premiums when you outlive the policy.

There may be other term life insurance subtypes, but these are the most common term life insurance policies.

What is permanent life insurance?

Permanent life, or whole life insurance, is exactly what it sounds like. This insurance policy will cover you for your entire life if you continue to pay your bills. In addition, many insurers will offer whole life with options to invest further and customize your coverage.

Some types of whole life insurance include:

  • Traditional whole – Lasts for your entire life as long as you pay your premium each month. Some of these policies accrue a cash value.
  • Universal life – With universal life insurance, you can customize the death benefit, and in turn, the premiums.
  • Variable life – This policy type allows you to invest your death benefit into the stock market, mutual funds, and other assets to increase the amount paid out (hopefully). You can also lose money.
  • Burial and final expense – You may only want enough coverage for your final medical bills and funeral; this policy provides just that.

With these whole life insurance policies, you can guarantee that you will have a payout for your loved ones no matter when you die. While whole life can be more expensive, that comes with covering the risk of paying out a large sum at some point.

What Life Insurance Covers: The Bottom Line

Life insurance can cover almost anything you need, from end-of-life medical bills to a child’s college education. A comprehensive policy customized to your life’s specific needs should be relatively easy to find. Life insurance provides financial protection for the people you care about.  Protect your family’s future by enrolling in the life insurance plan that fits your needs.  If you don’t have dependents or your loved ones can cover end-of-life expenses with your existing savings or investments, a life insurance policy may not be necessary.

What does a life insurance quote cover? Enter your ZIP code into our free quote tool to get an idea of what a life insurance policy might cost.