Insurance 101


Related Information

  • Six Life Insurance Questions

  • Why do I need life insurance?
    No one wants to leave their family unprepared for the future. Planning today can protect the promises of your family’s tomorrow. Most people buy life insurance as a way to replace lost income if something happens to them. Life insurance can also be used as collateral for a debt, provide needed income to carry on a family business, pay final expenses, and protect the transfer of your estate to others by providing funds needed to pay taxes.

    What are the different types of life insurance available?
    There are two basic types of life insurance – temporary and permanent.

    • Temporary insurance or term life insurance can cost less in the short run, but you are only protected for a limited number of years.
    • Permanent life insurance can come in the form of Whole Life or Universal Life and can cost more initially, but will cost less in the long run. Permanent insurance is designed to last your entire lifetime and has the benefit of producing cash value, which can be used in emergencies. Some plans offer access to a portion of the death benefit if you become terminally ill.

    How much life insurance do I need?
    That will depend on your specific situation. Some things that should be considered are:

    • Your annual income
    • Your debt
    • The amount of your mortgage
    • The age(s) of your children and if you intend on them attending college

    Your Farm Bureau Insurance agent can help determine the amount you need and can afford.

    At what age should I think about buying life insurance?
    Life insurance is a valuable asset, even more valuable as you age and the price of insurance protection increases or becomes unattainable due to health-related issues. The younger you are the better! Sometimes people wait until it’s too late. Buy life insurance early.

    How is life insurance paid out?
    Proceeds are income tax-free and you can select whether the entire amount is paid to your beneficiary at one time or over a stated period of time.

    Will premiums change over time?
    That will depend on the type of policy you select.

    • Term insurance has the benefit of level premiums for a specific length of time – 10, 20, or 30 years.
    • Whole life insurance premiums will remain the same through age 100.
    • Universal Life insurance has flexible premiums, but paying less in the early years of the policy could mean you will need to pay more in later years.

    Life insurance is a very important matter to discuss. Don’t wait until it’s too late.



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