Life insurance is a type of coverage that pays out a lump sum benefit to a designated beneficiary or beneficiaries in the event that you die. It provides financial security for people, such as family, loved ones, and business associates, who would be financially distressed if you were no longer alive to work and provide income. It is also useful to cover funeral, estate settlement, and debt repayment costs that arise when a person dies.

A policy owner should know what needs to occur before a policy claim can be filed. On the surface, answering what a life insurance policy cover seems pretty simple: When the insured dies, the policy death benefit is paid to its beneficiaries. That’s true in most cases, but not always.

The good news is “yes.” Your claim would be paid if you were to die due to having COVID-19, much as it would for any disease or illness, such as complications of diabetes or dying from pneumonia caused by having the flu. That being said, there are a couple of instances where a life insurance company might contest a claim.

In most states, the only requirement for a beneficiary is that they have an insurable interest in your life. This means that they would experience financial loss and/or hardship should you die. Your spouse, children, and grandchildren definitely fit that definition. So may aging parents if they depend on you.

A life insurance death benefit is the amount of money that a beneficiary receives when a policyholder dies. It’s not to be confused with the “face amount” of the policy, which is the amount of money the beneficiaries would be paid when the policy was issued. The death benefit is equal to the face amount of the policy minus any unpaid loans.

If you're feeling overwhelmed by all the different types of life insurance, don't worry — you're not alone. From term life to whole life, personal policies to group policies, and all of the insurance jargon in-between, shopping for life insurance can quickly become a complicated endeavor.

The insurance industry is notorious for jargon. But don't worry — our life insurance glossary rounds up and defines 40 common terms you may encounter as you apply for and purchase life insurance. You can find them conveniently divided into four main categories.

There are many variables that affect the cost of life insurance, including personal details, policy choices, and underwriting factors. That makes it’s impossible to provide a standard amount for everybody. However, you should be able to find a policy that fits within your budget.

How much would your dependents need to cover your financial obligations if you’re gone? This is a difficult question to answer. You can’t predict the future. You don’t know when you will pass away. And it’s challenging to determine what your survivors might need in 10, 20, or 30 years.

Dozens of companies offer life insurance. Policies have varying degrees of features. They can also vary in cost. Therefore, you should never limit your search to one policy or recommendation. When you compare options, assess more than just cost — survey all the various contract provisions.

Most people denied life insurance coverage are caught off-guard when the agent or company lets them know their decision. Many times, the denied individual could have known upfront if they’d have a problem getting a life insurance policy issued and may have been able to make personal adjustments or find another company that would likely approve their application.

Term life insurance is a policy that guarantees payment of a stated death benefit if the covered person dies during a specified term. The term of your insurance coverage begins on the date the policy is issued. Provided you pay the required premiums, the coverage will remain viable until the end of the term. Term lengths typically include 10, 15, 20, 30, and 40 years.

Permanent life insurance is actually an umbrella term for policies that will offer coverage permanently, as long as premiums are paid and up-to-date. Permanent life insurance provides a death benefit, and it has a savings element as well. There are two primary types of permanent life insurance: whole life and universal life.

Whole life insurance policies guarantee payment of a death benefit in exchange for level premium payments. Another way to define whole life insurance is that it’s a life insurance policy guaranteed to remain in force for the insured’s lifetime or to a maturity date, as long as required premiums are paid. It is designed to provide coverage for the life of the insured.

Universal life insurance combines death protection with a cash value element. One of the most attractive features is the flexibility of its payment structure — the policyholder can increase or decrease the amount they pay towards premiums. If you decide you want to have a lower premium, you have the difference withdrawn from your policy’s cash value.

Variable life insurance is a type of permanent life insurance coverage that lasts your entire life. The investment portion of the policy isn’t taxed while it’s growing, and the death benefit of a policy is paid out tax-free to your beneficiaries. Though it offers financial protection for a policyholder’s heirs, variable life is most often bought for its cash value accumulation feature.

Like whole life and universal life, variable universal life is a type of permanent life insurance, meaning that as long as you continue to pay your premiums, your beneficiaries will receive a death benefit when you pass away. Similar to whole life and universal life, VUL also has a cash value component that grows with each premium payment you make.

Indexed universal life insurance is a type of permanent life insurance. This simply means that in addition to a death benefit for your loved ones when you die, it also incorporates a cash account benefit that can earn interest. Just like you'd invest in index funds through a broker, your insurer invests your money in a stock market index like the S&P 500 or the Dow Jones Industrial Average.

Final expense life insurance, or burial insurance, is a form of permanent life coverage designed to pay for all costs associated with a funeral. This may include the cost of the funeral home, memorial service, embalming, casket, cremation, urn, burial plot, and more. Buying final expense life insurance typically does not require a medical exam.

Individual life insurance aims to meet the financial needs of your surviving spouse or family members when you, the insured individual, die. Individual life insurance offers a death benefit for your beneficiaries and can help them cope financially after your death. Individual life insurance involves one policy paid by one person — you — and only covers one individual — you.

If you have a full-time job, there’s a good chance you have the option of getting life insurance coverage as part of a group plan. Participating in a group plan is a good way to supplement your coverage at a reasonable cost. Therefore, if it’s offered by your employer, you should sign up. But you should also own an individual policy to ensure that you have adequate coverage.

Burial insurance usually refers to a whole life insurance policy with a death benefit. It's a long-lasting benefit that remains until you die. It won't expire unless you stop paying the premiums. You may choose to buy this type of insurance to help your loved ones pay for funeral and burial costs for yourself or your family members upon your (or their) death.

Voluntary life insurance has employee eligibility requirements for participation, such as requiring an employee to work over 30 hours per week. Employees can purchase coverage in increments of $10,000 or as a multiple of their salary. There are two types of coverage offered in voluntary life insurance plans: voluntary term life and voluntary permanent life.

Group life insurance is a great benefit, but it may not provide sufficient coverage if you have a family or other people who rely on your income. Here are some of the particulars about group life coverage that will help you decide if you should enroll in your employer’s plan — and if you need a supplemental policy, too.

As its name suggests, no exam life insurance's main advantage is that you do not have to undergo a pesky paramedical exam. Another benefit is that you can be issued a policy in a shorter amount of time because it often takes weeks to schedule a medical exam and additional time for the insurance company to receive and analyze the results.

A return of premium life insurance policy is term life insurance with a twist: if you outlive the policy term, the insurer will return all of the premiums you paid them. Your premiums are paid back to you after the policy term ends, like 5, 10, 20, or 30 years. For that reason, almost all ROP life insurance policies are term life insurance policies, rather than permanent life policies, which are typically purchased to provide you protection for life.

Guaranteed issue life insurance (GIL) is a type of permanent insurance policy that doesn't require medical underwriting by the life insurance company. Because it requires no medical exam and needs no answers to medical questions to qualify, a policy can be issued in a short amount of time, compared to a traditional, fully underwritten permanent life insurance policy.

Survivorship life insurance, also known as “second-to-die life insurance,” is a type of insurance that insures two people instead of just one. Although they can be term life insurance policies, most joint life policies are permanent life insurance policies, which last your entire lifetime and often have a savings component known as “cash value.”

To understand why one needs $1 million of life insurance, it helps to understand how experts calculate a person’s need for coverage. There are a number of templates, calculators, and rules of thumb available. One commonly held belief in the industry is that adequate life insurance equals 6 to 10 times your current annual salary. That means if you earn between $100,000 to $167,000, under this guideline you should have a $1 million policy.

Mortgage life insurance (also called mortgage protection insurance) pays off the unpaid balance of your mortgage should you die. Many banks and mortgage lenders offer mortgage life insurance. Normally, you choose the beneficiary of your life insurance policy, but not with mortgage life insurance, which is why lenders like it — they’re the beneficiary of your policy.

Credit life insurance is a type of credit insurance that pays off your loan if you die before the debt is settled. The policy’s face amount is tied to the loan amount; as you pay off the loan, the face amount will decrease. If you die before paying the loan balance, the life insurance policy will serve to repay the outstanding debt.

Most insurers offer a menu of optional benefits to enhance your coverage. Depending on your individual scenario, you may be interested in all, some, or none of these options. Keep in mind that many of these options will add to the cost of your insurance. Therefore, it’s important to understand what each rider offers and how it may potentially benefit you.

A critical illness rider — like a standalone critical illness insurance policy — will cover a predetermined list of conditions. The most commonly covered illnesses include cancer, heart attack, and stroke. Some riders may also cover other conditions like paralysis, Alzheimer’s, bypass surgery, angioplasty, kidney failure, or an organ transplant. You should always consult with the insurance company regarding the illnesses it covers prior to purchase.

Since there’s a high probability that we’ll need long-term care at some point in our lives, and there’s a 100% certainty that we’re all going to die, some life insurance companies have had the foresight to combine benefits for both events in one life insurance policy. This can be done by adding an optional long-term care rider to your life insurance policy for an additional cost.

Purchasing life insurance on your own life is an unselfish act. It means you’re helping to ensure the financial livelihood of your family or others in the event you pass away too soon. But have you considered what you might need if one of the important people in your life dies? To be protected financially, you may also need life insurance for other members of your family.

As you assess your life insurance needs as a couple, you will want to ensure that the surviving spouse or partner can maintain your standard of living if one of you dies. Keep in mind that a widowed spouse may need significant time off work to grieve. Life insurance benefits can help a surviving spouse replace the lost income they incur while taking time off work.

A scenario in which an individual policy is potentially needed is if your child has a medical condition that can make it difficult for them to qualify for coverage as an adult. In this situation, you can buy your child a whole life insurance policy, which they can continue owning as an adult. This not only locks in an affordable premium, but also protects your child’s insurability.

If you don’t already life insurance by the time you have your first child, you definitely need coverage once you become a parent. It may not be your first priority when that child arrives, but it’s something both parents need to have to ensure the child’s future. If one or both parents pass away, the death benefit from a life insurance policy can cover their financial needs into adulthood.

Because they are older and potentially have health problems, your parents are going to pay more in premium than you will for your coverage. Because of the cost of life insurance for older adults, it’s not advisable for your parents to buy whole life insurance. Whole life insurance is considerably more expensive than comparable term life insurance.

One reason that seniors may be in the market for a new life insurance policy is that their current coverage no longer meets their needs. For example, you may be holding on to a universal or whole life insurance policy that offers more coverage than you need and requires more premium payments than you care to spend. If so, it may make sense to surrender the contract.

Young adults typically don’t have much room in their budget for something they likely won’t use. The good thing about life insurance is that it’s flexible. You should be able to find coverage that fits your budget. One advantage is that your age is one of the main determining factors of cost. The older you are, the more you will pay.

Life insurance companies become profitable by issuing life insurance policies and collecting the premiums on those policies. But they will sometimes decline an application or charge a higher premium because they believe the applicant is high-risk and could negatively impact the company’s earnings. To the insurance company, the risk is greater than the potential reward.

If your pre-existing condition is serious enough that you can’t find affordable life insurance, there are other ways to get covered. One option is to find a guaranteed issue life insurance plan. With guaranteed issue life insurance, there is no underwriting. Anybody who applies for coverage will typically be issued a policy. While guaranteed issue policies don’t usually provide the same level of coverage as an individually underwritten policy, they can provide some financial support.

Most life insurance policies will cover a cancer-related death. If you have life insurance at the time of your death, you are almost certain to receive a death benefit if the cause of death is cancer. The only exception is if you lied on our application about your previous experience with cancer or your family history. That said, getting covered with or after cancer is a challenge.

If you are thinking about starting a family, it might be easier to get life insurance if you start the application process before that positive test. In addition to the physical changes that pregnancies bring, life insurance rates also increase each year you age. You can lock in more affordable premium rates today, even if you think you’re several years away from starting a family.

Life insurers are reluctant to issue new policies to people with pre-existing conditions, not only those with diabetes. People who have had heart problems, cancer, stroke, and many other illnesses also find it challenging to be approved for a new life insurance policy. Life insurers scrutinize people with diabetes because the disease is a risk factor for other medical conditions and operations,

The best way to minimize the effect of tobacco use and vaping on your premium is to buy a guaranteed issue life insurance policy. This is a type of life insurance that does not require underwriting or a medical exam. Applicants are automatically granted a policy; therefore, tobacco use is irrelevant. A couple of examples of guaranteed issue policies are group life insurance and final expense life insurance.

If affordability has kept you from buying life insurance, term insurance is your best bet. You’ll get more coverage for less money with term life, and it will expire later in your life when you no longer need life insurance. Level-term life is the most common type of term life insurance because the premiums won’t fluctuate on you, and income for the self-employed can be unpredictable.