8 Questions to Ask About Life Insurance

Life insurance is important for everyone. It can help you reach your financial goals and provide security for your loved ones. But deciding on the right policy can be confusing. There are many types of life insurance, with various types of benefits, terms and payouts. If you have questions, you’re not alone.

Even though types of life insurance vary, the concept behind all of the policies remains the same: They pay cash to your family after you die, helping those you care about remain financially stable even after you’re gone. Deciding which kind of insurance policy to purchase is a matter of figuring out which type suits your needs best — and that means getting answers to some fundamental questions.

Question 1: Why Do I Need Life Insurance?

Before you begin shopping for life insurance, your first question is probably “why?” 

The reasons people buy life insurance are different for everyone, but the main need is to provide for financial needs that your death might incur and protect your family from a possible catastrophic financial loss should you die. 

Life insurance can:

• Help pay off your outstanding debt, such as mortgages, car loans and credit cards.
• Pay uncovered medical and funeral expenses.
• Cover your family’s living expenses, such as food, housing, utilities, transportation and clothing.
• Offer financial security to your survivors by way of covering taxes and estate settlement costs.
• Help your family reach the goals you have for them, such as providing for college educations.

So, why do you need life insurance? To ease the financial burden on your loved ones — even after you’re gone.

Question 2: What Types of Life Insurance Are There?

Farm Bureau offers various types of life insurance, including term, whole and universal life insurance. Each serves as protection for your loved ones, but they differ in price and coverage characteristics.

Term life insurance provides protection for a specific period of time (hence the name). Term life insurance is usually purchased for 10, 15, 20 or 30 years. It’s designed for temporary circumstances and makes the most sense when your need for coverage will disappear — for instance, when your children are no longer financially dependent on you. Usually, term life insurance is less expensive than whole life insurance, and that makes it a popular choice for individuals and families who are in the prime of their life.

In contrast to term life insurance, there are two types of permanent life insurance: whole life insurance or universal life insurance. Permanent insurance offers lifelong protection, and it can accumulate cash on a tax-deferred basis. The cash value can be used for multiple purposes in the future.¹ The downside to permanent life insurance is that initial premiums are often higher than what you would pay for a term policy with the same face value. 

With whole life insurance, premiums remain the same for life, and the death benefit and rate of return on your cash values are guaranteed. 

With universal life insurance, you can seek potentially better returns by allocating your fixed premiums among investment sub-accounts, typically comprised of stocks and bonds. Universal life insurance offers the flexibility of varying your premium payments, as well as tax benefits.

With universal life insurance, your cash value can grow in one of three ways, depending on the type of policy. There are universal life policies, in which the cash value grows in a fixed interest rate account, and variable universal life policies, in which the cash value grows in mutual fund like subaccounts. 

Lastly, in an indexed universal life policy, the cash value growth is linked to the upside of a stock market index, but is protected from losses typically associated with the stock market.

Question 3: How Long Will I Need the Policy?

To determine term length, such as 10, 15, 20 or 30 years, or lifelong protection through permanent life insurance, here’s what you should consider:

• Do you have young children? If so, how old are they? You might want coverage that lasts until they are no longer of dependent age.
• Do you own a home, and if so, when did you get your mortgage? Maybe you’d like a term length that covers the time it’ll take to pay off your loan.
• How old are you, and at what age do you want to retire? Perhaps you should get a term length that covers you beyond retirement age.
• Do you want to leave a legacy after your death? Perhaps a permanent policy is the right choice.

Question 4: How Much Life Insurance Do I Need?

Since everyone’s financial situation is a bit different, there is no single rule to tell you how much life insurance to buy. Is it $250,000, $500,000, $1 million or more? Each one sounds like a lot of money, but when you pay for final expenses, replace lost income, credit card balances and other major debt after the loss of a loved one, the total can quickly add up. Life insurance is also meant to protect your future earnings, so a younger person with more future earning potential may want more life insurance to protect their family.

Talk to your agent to find the number that’s right for you and your family.

Question 5: How Much Will Life Insurance Cost Me?

The cost of life insurance depends on your age, your health and the size of the death benefit you want. In general, the younger and healthier you are, the lower your premium will be. While everyone’s financial situation is different, consider these facts from the 2025 Insurance Barometer Study:

• 74 million Americans need life insurance, and 25 million Americans need more life insurance.
• Historically, about three quarters of Americans overestimate the cost of life insurance.
• Adults 35 and under who say they are healthiest are overestimating how much life insurance would cost them by 6 to 12 times the actual cost.
• 46% of people who don’t have life insurance say it’s because of the cost.

Before you assume that a policy is out of reach, talk to a Farm Bureau agent about the actual costs. 

Question 6: Why Do People Not Have Life Insurance?

There are a number of reasons why people don’t buy life insurance. Here are some common ones:

• They don’t have enough money. If you’re already living on a tight budget, it can be difficult to pay for a life insurance premium. But here’s the other side of the coin: If your household finances are tight while people are alive and healthy, it will be much more difficult should one of you pass away. So, it’s wise to see if you can find wiggle room in your budget.
• They have a policy at work. Many employers provide life insurance for employees, but it typically is less than what someone should really have. And here’s the flip side: What if you lose your job? You might lose your life insurance policy, too.
• They aren’t in a hurry. It’s common to put off purchasing life insurance because you’re young, but it’s actually easier and more affordable to obtain life insurance when you are young and healthy.
• They’re unsure which policy type is the best. Don’t let the different product features intimidate you. A Farm Bureau agent can help you choose a policy and the amount of coverage to ensure your family will be protected. 

Question 7: What Are Other Benefits of Life Insurance?

The main goal of life insurance is to ensure the safety and security of loved ones. But it can also be used for things like these:

• Keeping the business in the family. Certain taxes² may apply when passing a family business to the next generation. But life insurance can help cover these costs, and it can help ease the tax burden on future business owners and other family members.
• Retirement. Certain types of life insurance policies build cash value over time, which can be a form of income in retirement.
• Mortgage or college. Life insurance can help protect your family from the obligations of making mortgage or college payments if your salary is no longer available to them.
• Charity. You can also use life insurance to increase charitable giving in your community. Policy holders have the opportunity to make a larger gift than would otherwise be possible by designating a favorite charity as a beneficiary on their life insurance policies. It’s a great way to leave a legacy.

Question 8: Are Policies Flexible with Life Changes?

The good news is there are ways to customize life insurance policies to suit your unique needs. As life circumstances change — and you know they will — take inventory of your life insurance coverage. Then connect with Farm Bureau to discuss the right options for you.