Everything you need to know about insurance basics, like coverage types, limits, cost and more.
How Does Life Insurance Work & What Does it Cover?
Life insurance is designed to help you financially protect what matters most — your loved ones. If you worry about providing for your loved ones after you pass away, life insurance can help you prepare them to cover expenses like medical bills and mortgage payments. To help keep you fearless, we’ve got all the details on life insurance and how it works.
What Are the Types of Life Insurance?
There are three main types of life insurance that you’ll see pop up most often in your research: term life insurance, whole life insurance and universal life insurance.
DreamSecure Term life insurance
Term life insurance, also known as temporary life insurance, is a short-to-long-term type of life insurance that ends after the initial term of the policy. At American Family Life Insurance Company, our DreamSecure Term Life Insurance policies can also be renewed after the initial policy term for an increased premium. If you pass away while the policy is in effect, your beneficiary will receive a death benefit. However, if your term life insurance policy ends before you pass away, your beneficiaries won’t receive a payout.
DreamSecure Whole life insurance
A permanent life insurance policy, such as DreamSecure Whole Life Insurance, offers coverage for — you guessed it — your whole life. Typically, a premium for whole life insurance will cost more than term life because, not only does it provide lifelong protection, but the policy also has the ability to accumulate cash value. Cash value is a component of whole life insurance that you can borrow against* while you’re still living.
Universal Life Insurance
Universal, life insurance is adjustable life insurance that provides long-lasting coverage and the flexibility to make changes to your policy. Universal life Insurance coverage also typically offers living benefits like the accumulation of cash value, and the ability to reduce or increase the amount of coverage and premium paid, subject to policy terms and conditions.
You insure your car, home and your health to protect yourself from the unexpected. Have you considered how you can help financially protect those you love if you pass away? When you purchase a life insurance policy, you pay premiums to your insurance company, and in return, they will pay your beneficiaries a death benefit — which is an agreed upon sum of money — if you pass away while the policy is in effect.
Life insurance is meant to help provide for your loved ones after you’ve passed away. It pays a death benefit, or set amount of money — which is generally income tax free — to your beneficiaries, and then it terminates. This money can be used for anything, including things like:
- College tuition
- Paying off a car loan
- Replacing lost income
- Medical bills
Yes, American Family Life Insurance Company’s life insurance will cover accidental death.
Yes, life insurance will cover natural death. This includes death from old age and from illness, as long as the policy is still active.
In most states, if the cause of death is suicide within the first two years of the policy issue date, then typically beneficiaries are paid no more than the amount of all premiums paid. Some states have a shorter period. See your policy for additional details.
If you have a DreamSecure Whole Life Insurance policy with American Family Life Insurance Company and live to the age of 121, you would reach what’s known as your policy’s age of maturity.*** This means that you’ve “outlived” your life insurance. You’ll receive a life insurance payout equal to the amount of the policy’s surrender value and the policy will terminate. You could also choose to extend the maturity date and keep the policy coverage.
Having a life insurance policy can be a great way to help protect your loved ones after you pass away. Buying a life insurance policy is a big step toward helping to secure your loved ones’ financial futures. It can help pay for anything, including final expenses and medical bills, and it can help replace some income should an earner pass away.
Once you choose a type of life insurance and amount, you’ll need to connect with your agent to complete an application, which covers things like your medical and financial information. Keep in mind that it may take a few days to weeks before you get your policy after applying if you’re approved. Make sure to be honest, thorough and detailed in order to keep the process moving smoothly.
You may also have to complete a telephone interview and an in-person health check, depending on the type of policy, coverage amount and your health history. You can learn more about how to buy life insurance here.
Additional Types of Life Insurance
When it comes to the things you worry about, it’s important to understand your coverage options. Here are a few other life insurance policies offered by American Family Life Insurance Company:
DreamSecure Simplified Term Life Insurance
A quick application process and no medical exam, just a few questions to help determine eligibility — that’s life insurance you can get on board with. Simplified Term Life Insurance is an uncomplicated type of life insurance because it doesn’t require a medical exam** or as many health questions as some other types of life insurance. Learn more about DreamSecure Simplified Term Life Insurance.
DreamSecure Senior Whole Life Insurance
Senior Whole Life Insurance is a great way to get life insurance if you’re between ages 50 and 80. It comes in small amounts that can be used for anything, including final expenses after you’ve passed away, like the cost of a funeral or any medical bills left behind. We make the application process simple and convenient. There’s no medical exam,** just an application to fill out and a phone call with some health questions. Learn more about DreamSecure Senior Whole Life Insurance.
DreamSecure Children’s Whole Life Insurance
Children’s Whole Life Insurance from American Family Life Insurance Company is protection that can last a lifetime. Parents or grandparents can take out a life insurance policy for children as a way to get their child started on securing their financial future and insurability. Learn more about DreamSecure Children’s Whole Life Insurance.
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*Any loans taken from your life insurance policy will accrue interest. Any outstanding loan balance (loan plus interest) will be deducted from the death benefit at the time of claim or from the cash value at the time of surrender. If the loan balance grows too large for the cash value to support it, the policy could terminate.
**The issuance of this policy may depend on the answers to the questions asked in the application.
*** Currently sold DreamSecure Whole Life Insurance policies mature at age 121. Previously sold whole life policies mature at a younger age. See policy for details.
Policy Forms: ICC18-33 (10), ICC18-33 (15), ICC18-34 (20), ICC18-35 (30), L-33 (10)(ND), L-33 (15)(ND), L-34 (20)(ND), L-35 (30)(ND), L-33 (10)(SD), L-33 (15)(SD), L-34 (20)(SD), L-35 (30)(SD), ICC18-36 (10), ICC18-36 (15), ICC18-36 (20), ICC18-36 (30), L-36 (10)(ND), L-36 (15)(ND), L-36 (20)(ND), L-36 (30)(ND), L-36 (10)(SD), L-36 (15)(SD), L-36 (20)(SD), L-36 (30)(SD), ICC17-225 WL, L-225 (ND) WL, L-225 WL, ICC17-227 WL, L-227 (ND) WL, L-227 WL, ICC17-223 WL, L-223 (ND) WL, L-223 WL, ICC17-224 WL, L-224 (ND) WL, L-224 WL, ICC17-228 WL, L-228 (ND) WL, L-228 WL