There is an old proverb that tells the two best times to plant a tree. The best time was twenty years ago, and the second-best time is today. If you are in the market for life insurance, or are not sure whether you need to be, there is no better time than today to “plant the seed” of financial security for your family, starting with five basic facts of life insurance you might not have known.
1. There are different kinds of life insurance.
You may have heard of both term life and permanent life insurance, which are the two main types of life insurance, but if you break it down further, you will find that there are several options within these main categories.
- Term life insurance: Term insurance provides coverage for a set period of time. This type of insurance is there to create a financial safety net for your family should you die unexpectedly during your working years or before a major financial obligation is paid. There is no cash value to a term life insurance policy; it will only pay out benefits should the policyholder die within the selected term.
- Servicemembers’ Group Life Insurance (SGLI): SGLI is automatically available to servicemembers for the duration of their time on active duty through 120 days after their separation or retirement.
- Veterans’ Group Life Insurance (VGLI): VGLI is available to servicemembers who apply within 1 year and 120 days after their separation or retirement from service.
- Employer-sponsored group life insurance: Employers often sponsor group life insurance policies for their employees, often at no cost to the employees. Note that coverage amounts are typically low, and that coverage ends when employment ends, regardless of the reason.
- Level term life insurance: Level term life insurance is a type of term insurance in which the premiums are guaranteed to remain the same (level) throughout the length of the policy term.
- Permanent life insurance: Permanent life insurance is designed to last throughout your life and to provide for your family after your passing. It will provide benefits regardless of when the insured dies. It also usually provides a savings element known as cash value, which is available in some policies should the policyholder need to take out a loan, make a withdrawal, or terminate the policy.
- Whole life insurance: Whole life insurance provides a guaranteed level death benefit for a fixed premium paid throughout the policyholder’s life.
- Universal life insurance: Universal life insurance provides an adjustable death benefit and flexible premiums based on interest rates and investment performance.
- Variable universal life insurance: Variable universal life insurance allows the policyholder to choose where to invest their premiums among different investment options separate from the insurers general account, with varying levels of risk. The death benefit depends on market performance.
You can read more about some of the various permanent life insurance products here.
2. It is not as expensive as you think.
According to LIMRA’s 2025 Insurance Barometer Study, many overestimate the cost of term life insurance. Adults aged between 18 and 30 years assume life insurance coverage for themselves would cost 10 to 12 times more than it actually costs. Those in their early to mid-30s overestimate the true cost of life insurance by over five times.
The same study concluded that some of the overestimation comes from a lack of knowledge about life insurance compared with other insurances, like health, automobile, or homeowner or rental insurance. This confusion leads many to not buy insurance when it would be most affordable for them, should they qualify for coverage.
3. Life insurance is not for you; it’s for your family.
Being the owner of a life insurance policy means that you are taking steps to protect your loved ones, not yourself, in the event of your death. By making your spouse or child the beneficiary of your policy, you ensure that they will have funds to cover the cost of your final arrangements, any outstanding debt that may need to be paid off, and any other financial goals of your choosing. Depending on the value of your policy, you could provide enough money to cover the cost of your child’s education, pay off the mortgage on your home, or simply leave money as a form of retirement income for your spouse.
4. The earlier you purchase life insurance, the better.
The younger you are when you purchase your life insurance policy, the more likely you are to be a healthy individual. When pricing premiums, life insurance companies consider your age, habits (such as smoking), and overall health. If you wait until you need life insurance because of a diagnosis or simply old age, you will face higher premiums if you are insurable or may be declined coverage.
5. You could see a payout before your death.
Accelerated death benefits may be available through the use of insurance riders added to your policy. These ensure that the insured party gets additional protection should there be a change in circumstances. For example, a disability rider would grant you income payments for a set period of time in the form of an annuity upon diagnosis or onset of a qualified disability. A terminal illness rider would provide a portion of your death benefit early if your life expectancy was under a specified amount of time. Some policies include an option or rider that could grant payments to help cover some of the cost should you need to go into a nursing home or receive home health care. It’s important to note that these options or riders are not long term care insurance.
Navy Mutual includes an accelerated death benefit with each Flagship Whole Life Insurance policy. This benefit allows for an early payout of the policy’s death benefit in certain qualifying situations if the insured develops a chronic illness or becomes terminally ill.
Have more questions about Navy Mutual’s life insurance products? We’re here to help. To schedule an appointment with a representative to discuss your family’s needs, click here, or email us at counselor@navymutual.org.
Photo courtesy of the United States Department of Defense. The DOD does not endorse any company or their products or services.