What are the benefits of life insurance?

One of the primary benefits of life insurance is to replace your income after you die to provide financial resources for your dependents. Your beneficiaries can use the death benefit they receive to pay funeral costs or medical expenses, as well as to pay off a mortgage, a car loan, credit card debt, living expenses, or anything else they choose. Even if you don't have dependents, life insurance can benefit you and others by giving to charitable organizations or covering your final expenses.

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Why is life insurance important?

Life insurance is essential when your loved ones depend on your financial support. It can also be a part of an overall estate plan. Some of the biggest benefits of life insurance include:

  • Creates an immediate estate

    Life insurance enables one to transfer wealth to beneficiaries quickly and efficiently, generally bypassing the probate process.

  • Death benefit is immediately available

    In most cases, the full death benefit is available regardless of how long the policy was in force prior to the death of the insured.

  • Income replacement

    By replacing your income, life insurance creates a financial safety net for your dependents. You can take comfort in the notion that the policy proceeds will take care of your family's living expenses after you're gone, and an insurance policy can facilitate future plans such as your children's education or your spouse's retirement.

  • Paying off debt

    The death benefit from a life insurance policy can pay off the remainder of a mortgage, medical, or credit card debt so that your family won't inherit that financial burden.

  • Paying for final expenses

    It can cover funeral, burial, or cremation costs along with outstanding medical bills, estate settlement costs and other end-of-life expenses.

  • Tax benefits

    Death benefits are not typically subject to federal income tax, which allows you to leave a tax-free inheritance to your dependents.

  • Donate to charity

    You can donate life insurance proceeds to charity by naming the organization as a beneficiary.

  • Builds cash value

    Permanent life insurance policies, like whole life and universal life insurance, build cash value. Part of the premium payments for a permanent life insurance policy are set aside to build cash value, which grows at a fixed or variable rate. You can borrow against cash value, or let grow over time and potentially decrease the premium.

Do different types of life insurance policies have unique benefits?

Yes. The two basic types of life insurance, term and permanent life, have benefits suited to different needs and financial goals.

Benefits of term life insurance

  • More affordable premiums as compared to permanent life insurance
  • Simple, straightforward coverage which is easy to manage
  • Provides coverage for a specific period of time, making it ideal for covering your mortgage, a child's education, or replacing an income
  • Some term life insurance policies offer the option to convert to a permanent whole life policy, allowing flexibility as your financial needs evolve

Benefits of permanent life insurance

  • Guaranteed lifelong protection as long as you pay the premiums
  • Savings component which builds cash value over time that you can borrow against or use to pay premiums
  • The cash value grows tax-deferred, so you don't pay taxes on the gains while these funds remain in the policy
  • Some permanent policies pay dividends, which you can use to reduce your premium or leave to accumulate interest

Who could benefit from life insurance?

Determining if life insurance could benefit you — and how much life insurance you need — can hinge on your financial situation and if you have dependents, so first consider your circumstances. You have good reason to consider getting a life insurance policy in these situations, among others:

You're planning to get married

Married couples often develop lifestyles that rely on both spouses' incomes. If something happened to you unexpectedly, your spouse likely couldn't maintain the same lifestyle on their income alone.

To ensure this doesn't happen, consider obtaining a life insurance policy to lessen the potential financial burden on your spouse.

You have kids or are planning to have a baby soon

Adding a life insurance policy for you and your partner when you have children is a smart financial move.

Opting not to get life insurance when you have children can result in the surviving parent having to work multiple jobs or completely change their lifestyle. Ask yourself simple questions like, "Will my family survive on my partner's income if something happens to me?"

About to become a parent? Read up on getting life insurance as a new parent.

You financially support aging parents

In general, if someone, including a parent, relies on your income to live, then it's crucial to consider a life insurance policy. If you're the primary breadwinner responsible for providing for your elderly loved ones, a life insurance policy can guarantee that your parents or grandparents can afford long-term care should anything happen to you.

Pro tip:

You may also consider taking out a life insurance policy on your parents' behalf, naming you as the beneficiary (the person who receives the policy's death benefit). This approach makes sense if you would be responsible for paying for their end-of-life expenses, such as funeral services, medical bills, and any debt you co-signed with them.

You're currently in debt

While the government automatically forgives federal student loans upon death, private loans and mortgages may not be. In the event of your passing, any jointly held debt could become the responsibility of your spouse or other family member, especially if they were a co-signer. One of the advantages of a life insurance policy is that it may help pay these debts.

You want to cover your funeral or estate expenses

Whether you have dependents or not, you may want life insurance designed to cover your final expenses so those costs don't fall to someone else, such as friends or family members.

Pro tip:

There are many benefits to buying life insurance, and many different types of life insurance that could suit your specific needs. Learn more about when it makes sense to get life insurance and which policies may work for you.

Do I need life insurance if I'm single?

Yes, life insurance can benefit single persons too, especially if you're concerned about who would pay for your final expenses. With a life insurance policy, you can name a trusted friend or family member as your beneficiary to pay for funeral services, outstanding debt, and other expenses. Learn more about situations where life insurance makes sense when you're single.

Finding the right life insurance policy through Progressive

Determining the best time to get a life insurance policy isn't always clear. We all experience life differently — so answering questions like, "Do I need life insurance after 30?" or "Do I need life insurance after 60?" depends less on your age and more on your circumstances at that age. You might need life insurance after having a baby when you're in your 30s or if you're taking care of an ailing parent when you're in your 60s.

Here are some additional resources to help you determine why you should get life insurance, and find the right policy for your circumstances:

Get a quote for life insurance through Progressive

Quote life insurance online: After answering some questions, you'll choose your coverage amount and term length (if applicable).

Call 1-866-912-2477: You'll speak with a licensed Progressive Life by eFinancial representative who will guide you through everything.

Get a free life insurance quote online in minutes

Learn more about life insurance policies.

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Please note: The above is meant as general information to help you understand the different aspects of insurance. Read our editorial standards for Answers content. This information is not an insurance policy, does not refer to any specific insurance policy, and does not modify any provisions, limitations, or exclusions expressly stated in any insurance policy. Descriptions of all coverages and other features are necessarily brief; in order to fully understand the coverages and other features of a specific insurance policy, we encourage you to read the applicable policy and/or speak to an insurance representative. Coverages and other features vary between insurers, vary by state, and are not available in all states. Whether an accident or other loss is covered is subject to the terms and conditions of the actual insurance policy or policies involved in the claim. References to average or typical premiums, amounts of losses, deductibles, costs of coverages/repair, etc., are illustrative and may not apply to your situation. We are not responsible for the content of any third-party sites linked from this page.

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