Life Insurance Frequently Asked Questions

If you have a partner, children, or elderly parents who depend on you for support (financial or otherwise), then it’s a wise decision to purchase life insurance, which will provide them with a financial safety net should something unexpected happen to you. You might not need life insurance, however, if you have already built up enough savings to provide that safety net on your own.

Life insurance benefits are paid in full in one lump sum to your beneficiaries when you die. In turn, they can choose to use the money however they want to. Some people use the funds to pay off a mortgage; others continue making rent payments. Often, life insurance benefits are used to care for children, fund college expenses, and cover day-to-day living expenses. They can be used to settle any unpaid medical bills, taxes, or co-signed debt that would otherwise transfer over to your co-signer. Although life insurance benefits are usually tax-free, sometimes the money is used to cover any estate taxes your family must pay to inherit your other assets.

The best time to get life insurance is when someone depends on you. Also, the younger you are, the more affordable your life insurance is likely to be. It’s a smart move to lock in a low monthly price now, which will stay flat for the entire term of your policy.

As your needs change over time, you can change your insurance. If you have another child or buy a bigger house, your needs might increase, and you can apply for more coverage. As you save money or earn more over time, your needs might decrease, and with Ladder, you can decrease your coverage with no fees or penalties.

Oftentimes not. Many people are surprised to learn that the life insurance included as part of their benefits package is only one or two times their salary. I find most people need far more than that to feel comfortable. Also, coverage generally doesn’t move with you if you change jobs.

Those who stay at home provide all kinds of unpaid work to keep a household running. If something were to happen to a stay-at-home partner, it could be expensive to hire external help for things like child care, driving, cooking, cleaning, and managing household finances. It’s a wise decision to insure both adults in your household, regardless of whether they bring in income.

Life is dynamic. As your needs change, so, too, should your coverage. For instance, if you have another child, purchase a home, or incur new debt, you might apply for more life insurance to cover these things. On the other hand, if you pay off your mortgage, a child graduates from college, or you’re able to save a large amount of money, you might decrease your coverage.

In general, it’s a good idea to check in with yourself on a quarterly or annual basis and adjust your coverage accordingly.