Why do I need life insurance?

Life insurance is an essential part of any financial program. Most people buy life insurance to replace income that would be lost at the death of a wage earner. The cash provided by life insurance also can help ensure your dependents are not burdened with significant debt when you die. Life insurance proceeds could mean your dependents won't have to sell assets to pay outstanding bills or taxes. An important feature of life insurance is that generally no income tax is payable on proceeds paid to beneficiaries. If you have questions about tax matters, talk to your tax advisor.

This information should not be considered tax advice. You should consult your tax advisor regarding your own tax situation.

How much life insurance do I need?

Before buying life insurance, you should bring together your personal financial information and review your family's needs. There are a number of factors to consider when determining how much protection you should have. Including:

• Any immediate needs at the time of death, such as final expenses, burial costs and estate taxes;
• Funds for a readjustment period, to finance a move or to provide time for family members to find a job,
• Ongoing financial needs, such as monthly bills and expenses, day-care costs, college tuition or retirement.

Use your personal benefits decision tool, Benefit Scout^TM, to help you decide what life insurance options make sense for you and your family.  

How do I choose a beneficiary?

Designating a beneficiary is an important right of life insurance ownership. It lets you determine who receives your policy benefits. Under current tax law, life insurance benefits paid to a beneficiary are generally not taxable income.

Common terminology

• Primary beneficiary - The person or persons named will receive the benefit.
• Contingent (secondary) beneficiary - Policy benefits will be paid to the contingent (secondary) beneficiary, if the primary beneficiary is not living.
• Irrevocable beneficiary - Once you designate an irrevocable beneficiary, you may not change it without the beneficiary's written permission.
• Default beneficiary - If you don't name a beneficiary, policy benefits will be paid in order of priority as listed in the policy.

How to designate multiple beneficiaries

After determining whom you want to select as your beneficiary or beneficiaries, you may then choose what percentage of the benefit each individual should receive.

For example:

Primary Jane Doe, daughter, and John Doe, son

• Jane and John will equally share the proceeds. If any additional children are born, they will not be eligible to receive a portion of the proceeds.

Primary Susan Doe, spouse
Contingent Jane Doe, daughter, 75 percent and John Doe, son, 25 percent

• The proceeds will be paid to Susan Doe. If Susan is not living, then the proceeds will be paid 75 percent to Jane Doe and 25 percent to John Doe.

Primary William Doe, Trustee, his successors or successor in trust under the William Doe Revocable Trust Agreement. Executed by the insured on June 1, 1995.

• The proceeds will be paid to a formal trust. If the Trust is an institution, the address of the institution should be included.

How do I learn more about a life insurance company?

Before purchasing life insurance, we encourage you to evaluate the financial strength and ethical reputation of the insurance company. This can be done by requesting information from the state insurance department or reviewing information from an insurance rating service. You can also check your state insurance department's web site (if available).

We are highly rated by the major independent rating agencies that analyze the financial soundness and claims-paying ability of insurance companies. Learn more about the rating agencies and view our ratings.