Commonly Asked Questions about Insurance
Life insurance is a crucial part of a comprehensive financial plan, but it can feel confusing and overwhelming for many individuals and families. At Quantum Planning Group, we regularly receive questions from clients who want to understand how life insurance works, why it’s necessary, and how to choose the right type and amount of coverage. Below, we’ve compiled some of the most frequently asked life insurance questions—with clear, honest answers to help guide you in your decision-making.
1. Do I Really Need Life Insurance?
This is the most common starting question—and for good reason. The need for life insurance depends on your stage in life, family situation, and financial goals. If you have dependents (like children, a spouse, or aging parents), debts (such as a mortgage or personal loans), or want to leave a legacy (charitable giving or estate planning), life insurance can protect your loved ones from financial hardship in the event of your death. Even young, single individuals may want to consider life insurance to lock in lower premiums while they are healthy or to cover final expenses.
2. What’s the Difference Between Term and Permanent Life Insurance?
Term life insurance covers you for a set period (usually 10, 20, or 30 years) and pays a death benefit only if you pass away during that term. It’s typically more affordable and is ideal for temporary needs like covering a mortgage or protecting income while children are still dependent.
Permanent life insurance, including Whole Life and Universal Life policies, lasts for your entire life as long as premiums are paid. It also builds cash value, which can be accessed during your lifetime. Permanent insurance is ideal for lifelong protection, estate planning, tax-advantaged wealth transfer, or charitable giving.
Many clients choose a combination of both term and permanent policies to balance affordability with long-term benefits.
3. How Much Life Insurance Coverage Do I Need?
There is no one-size-fits-all answer, but a good starting point is the “10x Income” rule—purchasing coverage equal to 10 times your annual income. However, this should be customized based on your debts, income replacement needs, children’s education costs, final expenses, and any legacy goals you may have.
A comprehensive needs analysis with a qualified advisor, like our team at Quantum Planning Group, will give you a tailored estimate of the right amount based on your unique circumstances.
4. Is Life Insurance Expensive?
Cost is a key concern for many people. The price of life insurance depends on several factors: your age, health, smoking status, the type of policy, and the amount of coverage you choose. Term policies are generally much more affordable than permanent ones.
For example, a healthy 30-year-old non-smoker could potentially get $500,000 of term life coverage for as little as $25/month. On the other hand, permanent insurance costs more but offers lifelong coverage and cash value growth.
Working with an independent advisor allows you to shop multiple carriers for the best rates, and create a plan that fits within your budget and meets your needs.
5. What Happens if I Outlive My Term Life Insurance Policy?
If you outlive your term policy, the coverage simply expires—much like car insurance when a policy term ends. At that point, you can choose to renew, convert to a permanent policy (if allowed), or reassess your needs to determine if coverage is still necessary.
It’s wise to review your insurance needs every few years, especially when major life events occur—such as marriage, children, or a new mortgage.
6. Do I Need Life Insurance If I Have Group Coverage Through Work?
Employer-provided life insurance is a valuable benefit, but it’s usually not enough on its own. Most group plans provide coverage equal to 1–2 times your annual salary, which likely falls short of protecting your family’s full needs.
Additionally, this coverage typically ends when you leave your employer and can be cost prohibitive when you leave if you want to take it with you. Owning personal life insurance ensures you remain protected no matter where your career path leads.
7. Can I Get Life Insurance If I Have Health Issues?
Yes, though your health will impact your premiums and the types of policies available to you. Some insurers specialize in offering coverage to individuals with medical conditions. Options like guaranteed issue or simplified issue policies exist for those who may not qualify for traditional coverage—but they come with higher premiums and/or lower benefits. It’s crucial to work with an advisor who can match you with insurers that consider your specific health situation.
Getting insurance early, before health conditions may develop allows you to lock in lower rates, which is why a lot people apply earlier to lock in the health they are now.
8. What Happens to My Policy’s Cash Value?
For permanent policies, a portion of your premiums builds cash value on a tax-advantaged basis. This money can be borrowed against, withdrawn, or even used to pay premiums. However, borrowing from the policy can reduce the death benefit and may have tax implications.
Cash value should be viewed as a supplemental financial tool—not the main reason for buying life insurance.
Life insurance is a powerful way to provide peace of mind, protect your family, and enhance your overall financial plan. At Quantum Planning Group, we believe the best life insurance policy is the one tailored to your unique goals and life situation.
If you have more questions or want a personalized review of your coverage needs, contact us today. Our mission is to make this process transparent, understandable, and aligned with your long-term success. We’re to help create a plan for you and your family that suits your needs.