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What is life insurance?

Simply put, life insurance is a way for you to provide financially for your loved ones after you die. It’s a contract in which the insurer promises to provide your beneficiaries with a certain amount of money in the event of your death. Whether or not you are eligible for life insurance will depend on factors such as your health and type of employment. If you do qualify, the amount of your premiums—that is, payments for the policy— are based on factors such as your age, gender, health and occupation.

Certain types of Permanent Life Insurance policies can also build cash values on a tax-deferred basis that you can use during your lifetime, through loans and withdrawals. Are you planning to get married? Buy a house? Start a business? Send a child to college? These are wonderful (and smart) reasons to add a life insurance policy to your financial strategy.¹

Do I need life insurance?

Of course the answer depends on your personal circumstances. But if you’re not sure, see the list of ifs below. If you relate to one or two, the answer is probably yes.
I may need life insurance…

If I have a spouse
If I have children who depend on me
If I have an aging parent or disabled relative who depends on me
If I have another loved one I wish to provide for

Are there other reasons to look into life insurance?

Absolutely. Certain permanent policies allow you to withdraw or borrow against accumulated cash value during your lifetime. Although this feature should be used with care, since it loans or withdrawals generally decrease your death benefit, the money can help with a few other ifs in your life. For example…

If I want to build a cash reserve that can help pay for big-ticket items such as a child’s college education¹
If I have business or estate planning needs that life insurance can satisfy
If my retirement plan and other savings aren’t enough to protect my family’s standard of living in the future

What types of life insurance are there?

There are two basic types of life insurance. The first is term life insurance which covers you for a period of time—or term—that you choose, after which coverage ends. The second is Permanent life insurance which offers a few more variations, such as cash-value accumulation, and covers you for your lifetime. Types of permanent life insurance include, whole life insurance, universal life insurance and variable life insurance.

Learn more about the types of life insurance.

How do I choose the life insurance policy that’s right for me?

Before buying a policy, ask yourself these questions:

	How much insurance do I need? If you were to die, consider what your spouse and dependents would need in order to cover day-to-day as well as larger expenses, to live comfortably and have financial stability.

	In addition to protection, what am I trying to accomplish with my life insurance? Some life insurance policies can help you pay for major expenses like college tuition and estate expenses, or provide additional income for retirement or emergencies. Remember that Term Life Insurance pays a death benefit only, while different types of Permanent Life Insurance—Whole, Universal and Variable Universal Life Insurance—can supplement your income through withdrawals or loans against a policy's cash value.¹

	What should I consider when choosing a policy provider? In addition to being financially secure, the life insurance company you choose should have a good claims payment history, good customer service and competitive pricing. Independent sources such as Standard and Poor's, A.M. Best, Moody's, Fitch, and Weiss rate insurance companies and their publications can be found in your local library.

How much will life insurance cost me?

Premium rates for life insurance are typically based on factors such as your age, your sex, your height and weight, your health status, whether you use tobacco, your occupation and whether you participate in dangerous sports activities. The type of policy you purchase will also affect the amount of the premium. Rates for term insurance are typically lower, at least at younger ages, and premium rates for permanent policies like whole life are typically higher at earlier ages, but do not increase as you age. Lastly, the premium "mode"—that is, the frequency of premium payments—will also affect the amount. Paying premiums more frequently rather than annually will result in higher premiums.

How can I save money when buying life insurance?

Life insurance doesn’t have to be expensive. Here are a few tips to lowering your premiums and saving money in the long run.

	If you’re in good health, now would be the perfect time to buy a competitively priced policy. Health is generally a key factor in how low or high your premiums are.

	If you buy Term Life Insurance, look for guaranteed renewable policies. That way, if your health changes in the future, you’ll still be able to have insurance at the rates provided in the policy.

	If your employer offers group life insurance coverage, make sure to participate. Group insurance may offer more benefits at a lower cost than comparable plans offered outside the workplace.

What if I already have insurance coverage?

Good question—and an important “if” to consider. If you already have a life insurance policy, it’s a good idea to review it every few years to make sure it still meets your needs, and that beneficiaries and other information are current. Check out the ifs below—do any pertain to you? It might be time to sit down again with your Representative.

If you …

	...	were recently married or divorced
	...	have a child or grandchild who was recently born or adopted
	...	or your spouse’s health has deteriorated
	...	provide care or financial help to a child or parent
	...	want to ensure that financial resources are available to provide assistance or long-term care for a loved one
	...	purchased a new home recently
	...	have children or grandchildren who are about to enter school or college
	...	or your spouse has retired or will retire early
	...	or your spouse has been promoted recently
	...	refinanced your home mortgage in the past six months
	...	or your spouse has received an inheritance
	...	have started a business

What are the tax advantages of life insurance?

Death benefits are generally received income-tax free by your beneficiaries. In the case of permanent life insurance policies, cash values can accumulate on an income-tax free basis. That means that generally you would not have to pay income-tax on any earnings in the policy as long as the policy remains in effect. Policy loans, like most other loans, are also not taxable in most cases.¹ However, if you surrender your policy—or it lapses—you may have income to the extent that the total of cash value and/or any distributions or withdrawals exceeded your basis (e.g., the total premiums paid) in the policy.

Circular 230 Notice: The information contained on this website is not intended to (and cannot) be used by anyone to avoid IRS penalties. This website supports the promotion and marketing of life insurance products. You should seek advice based on your particular circumstances from an independent tax advisor.

Can I trade or replace my policy?

You can trade or replace your policy, but you should think carefully before you do. Whether you switch policies within the same company or switch from one company to another, new permanent policies typically have high costs the first few years, and there is normally a new “contestability period" during which the insurer can cancel the policy and refuse to pay death benefits if information on the application was materially incomplete or misleading. Plus, premium rates are typically based on, among other things, age, so a new policy is likely to be more expensive.

If you’re planning to increase your total life insurance, it’s probably better to keep your old policy, and increase its face amount if you can, or simply add a new policy. Your existing policy premiums will generally be less than those for the new policy because you bought it when you were younger, and you won't lose any existing cash value if you don’t surrender your policy. Your MetLife Representative can help you find the best alternative for your specific situation.