8 Questions to Ask About Life Insurance

Sep 20, 2022 5 min read

Life insurance provides security for your loved ones, but deciding on the right policy can be confusing. These questions take the guesswork out of buying life insurance.

There are many types of life insurance, but for all of them, the concept is the same: They pay cash to your family after you die, helping those you care about remain financially stable even after you’re gone. Get your life insurance questions answered with this handy guide on what to consider when buying life insurance.

Why Would I Need Life Insurance?

Before you begin shopping for life insurance, naturally your first question might be “why.” The reasons people buy life insurance are different for everyone, but the main need for life insurance is to 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

What Are the Types of Life Insurance?

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

Term life insurance provides protection for a specific period of time, hence the name “term.” Term life insurance is 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, possibly when your children graduate from college. It’s generally less expensive than whole life insurance, making it a popular choice for individuals and families in the prime of their life.

Permanent life insurance offers lifelong protection, which can accumulate cash value on a tax-deferred basis. The cash value can be used for multiple purposes if you get in a tough spot.1 The one downside to permanent life insurance is that initial premiums are often higher than what you would pay for a term policy with the same amount. There are two types of permanent life insurance: whole life or universal life insurance.

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 comprising stocks and bonds. Universal life insurance offers the flexibility of varying the amount of your premium payments, as well as seeing other tax benefits. With universal life insurance, your cash value can grow in one of three ways depending on the type of policy. In a universal life policy, the cash value grows in a fixed interest rate account. In a variable universal life policy, the cash value grows in mutual fund like subaccounts. And 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.

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, and 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? Possibly get a term length that covers you beyond retirement age.

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 sounds like a lot of money, but when you have to pay for final expenses, replace lost income, credit card balances and other major debt, the total can quickly add up.

How Much Will Life Insurance Cost Me?

The cost of life insurance depends on your age, your health and what size death benefit you want. The younger and healthier you are, the lower your premium will be. While everyone’s financial situation is different, consider these facts from the 2022 Insurance Barometer Study:

  • 1 in 10 people with life insurance say they feel they need more life insurance protection.
  • 1 in 3 people without life insurance say they are more likely to buy because of the pandemic.
  • 44% of families would face financial hardship within 6 months, and 25% would suffer financially within a month.
  • 43% of millennials overestimate the true cost of life insurance by over six times the actual amount.

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. Now’s the time to realize that if your household finances are tight while people are alive and healthy, it will be much more difficult should one of you pass away.
  • They have a policy at work. Many employers provide life insurance for employees, but it usually caps out at a low level. Additionally, 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. When you meet with a Farm Bureau agent, he or she can help you choose a policy and the amount of coverage to ensure your family will be protected. What Are Other Benefits of Life Insurance?

Life insurance’s main goal is to ensure the safety and security of loved ones, but it can also be used for:
  • 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. 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.

Are Policies Flexible with Life Changes?

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

1.Any policy loans or withdrawals from the cash value will reduce the amount of your life insurance coverage if the borrowed funds, plus interest, are not repaid by the time of your death. Further, if your life insurance policy is classified as a Modified Endowment Contract (MEC), distributions, including loans, may be taxed less favorably than non-MEC policies. 2.Neither the Company nor its agents or advisors give tax, accounting or legal advice. Consult your professional advisor in these areas.

Want to learn more?

Contact a local FBFS agent or advisor for answers personalized to you.