What Are Life Insurance Policies For?

One of the few sure things in life is that it will, one day, end. Everyone will eventually pass away, leaving loved ones behind. Life insurance gives New Jersey residents a way to continue financially providing for their families and loved ones upon their passing.

Life insurance policies, in their most basic form, provide death benefits. These benefits are often directed to family members, but almost anyone can be named a beneficiary of a life policy. In most cases, a policy’s death benefits can be directed toward relatives, unrelated individuals, and even organizations.

Some policies also offer other services, such as retirement plans or investment vehicles.

Are There Different Kinds of Life Policies?

Life policies can be separated into two categories: whole life policies and term life policies.

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Whole life policies are meant to cover a person for their entire life, hence the name “whole life.” They also usually include investment. Whole policies’ premiums typically increase as a policyholder ages, but so can the investments in them. Eventually, the earnings from the investments can grow to cover the premiums, essentially paying for the policy later in life.

Term life policies last for a set term. There are term policies that will last for 10, 15, 20, 25 or 30 years, and some have even different term lengths. Once a term policy’s coverage period is over, it no longer will provide death benefits. Because term policies don’t last as long, their premiums tend to be much lower than whole life policies’.

Most term life policies don’t have retirement plans or investment vehicles. They only provide death benefits. 

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What Can Policies’ Benefits Be Used For?

Life policies’ death benefits can be used for many things. People often use them to:

  • Compensate for a decrease in family income upon the policyholder’s passing
  • Pay medical bills associated with the policyholder’s end-of-life care
  • Pay off any outstanding debts the policyholder has
  • Cover funeral expenses for the policyholder
  • Help with other financial needs that beneficiaries have

Is a Whole or Term Life Policy Better for New Jersey Residents?

Whole life and term life policies both provide death benefits and may seem to serve the same purpose. They’re really designed to meet different needs, though, and which one is better for a New Jersey resident will depend on the individual’s needs.

A whole life policy can be a good choice if someone wants to save for retirement through their insurance policy, rather than another investment vehicle. Whether or not an insurance policy’s investment tools are the best tools available to a person depends on their job situation, age, and many other factors that affect what investment options they do and don’t have.

A whole life policy may also be the better choice for anyone who financially provides for a disabled, handicapped, or chronically ill loved one. Because whole life policies last for the policyholder's enter lifetime, providers can be sure their loved one will be financially provided for upon their death -- regardless of when they pass away.

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A term life policy may be appropriate for someone who wants to ensure that their loved ones will be financially cared for if they pass away during a certain amount of time. Often, parents will consider this type of policy. If they pass away while the policy is in effect, their partner and children will be able to use the policy’s death benefits to help with their living expenses. Once the policy’s term is over, their children will hopefully be self-sufficient, and they’ll hopefully have a nest egg. Thus, if they pass away after the policy’s term has ended, their loved ones will have other financial resources to draw on.

How Can New Jersey Residents Get Life Insurance?

For help comparing whole and term life policies, New Jersey residents can contact an independent insurance agent who is licensed in the state. There are agents all over the state who are knowledgeable about the different life insurance solutions that are available to protect you.

Meet Your Industry Specialist

Brian Millinger-1

Brian Millinger

Mr. Millinger is a financial services professional with 16 years experience. Brian stresses creating long-term working relationships and his passion is to ensure that his clients' financial decisions meet their goals and objectives. He is there for his clients as their lives and objectives change over time.

In his spare time, Mr. Millinger volunteers in the Veteran Community and is a board member of Project Empower, a division of Jewish Family and Children's Services of Philadelphia. Brian also enjoys coaching his kids sports teams.

Mr. Millinger resides in Huntington Valley, Pennsylvania with his wife and children. They enjoy sports, traveling, and spending time with friends and family.

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