Is life insurance worth it?

Life insurance can be an important part of a solid financial plan. It can provide security to your loved ones, pay for your final expenses and cover your outstanding debts. In some cases, it provides cash value that you can use while you're still alive.

Whether life insurance is for you depends on what you need from your policy and the value you place on financial protection and peace of mind.

How does life insurance work?

Like the insurance that protects your home and your car, life insurance covers an important asset: your life. When you're gone, will your loved ones be able to keep up with expenses? Think about your mortgage payment, car payment, college tuition and child care. A life insurance death benefit helps ensure your family won't struggle to make those payments.

Most insurance policies require monthly premiums, which are based on many factors. Those factors include the size of the policy's benefit, your age and your health. The older you are and the shorter your life expectancy, the more expensive your insurance will be.

What are the benefits of life insurance?

If you're looking for a way to provide for your loved ones after your death, you'll want to consider life insurance.

Your dependents can use the death benefit to pay for your funeral expenses, settle your debts and cover living expenses. It can also replace the loss of your income, which may have been paying for your dependents' needs.

There are several types of life insurance plans, but they fall into two basic categories: term and permanent. The best combination for you depends on your needs.

Term life insurance

A term policy covers you for a set period. You pay a periodic premium, and if you die during that time, the policy will pay out to your beneficiaries. Term policies aim to be more affordable for the coverage amount and do not include a cash value component.

The payout on a term life insurance policy can help take care of your family's immediate needs after you're gone. For example, your family can use it to:

• Pay off consumer debt, like credit cards.
• Repay loan obligations, like a mortgage or auto loan.
• Make up for the loss of your income.
• Cover unexpected final expenses, like medical bills.
• Pay for child care or education expenses.

There are a few drawbacks when considering term life insurance. First, it's not a guarantee that everyone will qualify for a policy.

And while no one wants their family to have to take advantage of life insurance, you're only covered for a certain period of time with term insurance protection.

Permanent life insurance

If you're looking for lifetime coverage, you might consider permanent life insurance. While life insurance isn't an investment vehicle, permanent insurance has a component that allows policyholders to accumulate a cash value that they can draw on during their lifetime.

Permanent life insurance often is used to cover long-term expenses. For example, you could use it to:

• Replace retirement income.
• Repay long-term debt.
• Cover final expenses and funeral costs.
• Help with estate planning.
• Build tax-deferred cash value.

If you're concerned about holding coverage for your lifetime, especially after retirement, the cash value component is a notable feature. It can help offset premium cost or be paid back to you should you cancel the policy. You can also borrow against the cash value.

On the downside, permanent policies are generally more expensive. The rate of insurance, other fees and potential taxes all play into higher cost.

Also, if you borrowed against the cash value, it may reduce the value of the death benefit.

How can life insurance affect my financial security?

According to LIMRA's 2025 Insurance Barometer Study, almost half (47%) of families said they would face financial struggles within six months of the death of the primary wage earner.

Life insurance is a key element in feeling financially secure, yet the same study found that 49% of Americans don't have life insurance.

So why don't people have coverage? Concerns over how much it will costs, competing financial priorities, and not understanding how much or what type of coverage is needed are cited as the main reasons for not purchasing life insurance.

When you look beyond these practical barriers, the decision to purchase life insurance is more than just a financial one; it's about securing peace of mind and offering a lasting legacy of love and security to your family. While the practical benefits of covering debts, final expenses, and lost income are clear, the true value lies in the emotional reassurance it helps provide. Knowing that your loved ones will be protected during their most vulnerable moments, free from financial strain, allows you to live with a greater sense of calm and confidence. It's an act of profound care, ensuring that your support for your family continues, even when you can no longer be there in person.

Don't let concerns about cost or complexity overshadow the invaluable emotional security life insurance offers. Take the step to protect not just their finances, but their future well-being and your own peace of mind.