What is life insurance?
Life insurance offers a way to replace the loss of income that occurs when someone dies (usually the person who produces the majority of income in a family situation). It is a contract between you as the insured person and the company or "carrier" that is providing the insurance. If you die while the contract is in force, the insurance company pays a specified sum of money, income tax-free, to the person or persons you name as beneficiaries.
Do you really need life insurance?
If there is someone who would suffer economic hardship if you died, then you need life insurance. Funeral expenses; probate and administrative fees; outstanding debts such as mortgages, cars or credit cards; and school or college tuition are costs that must be considered. Life insurance can provide the financial security needed to give you peace of mind.
What is the difference between Whole and Term Life Insurance?
The two basic types of life insurance are permanent, “whole” life insurance and temporary, “term” life insurance. The main differences between the two types are how long you’re covered, how much you’ll pay upfront, and whether you will build cash value or earn dividends. Check our comparison page to learn more.
What is a premium?
A premium is the payment you make for your insurance policy, usually on a monthly basis.
What is a beneficiary?
A beneficiary is the person who receives the money (the death benefit) after you pass away. This is most commonly a spouse or children, but the choice is yours.
What is a death benefit?
The death benefit is the amount paid to your beneficiaries when you pass away. Beneficiaries may receive the death benefit in a lump sum, or leave an amount on deposit with National Farm Life to earn interest and use on an as needed basis.
What is underwriting?
In insurance, underwriting refers to analyzing information on a potential policyholder to determine their risk level – this in turn will determine whether they can be insured and for how much. Ultimately, it means you might need to answer some questions or undergo a basic medical exam before we quote you a premium. The level of underwriting may change depending on the type of policy. Our term life policies are underwritten just like our whole life policies, so you can upgrade at any time.
What are dividends?
Dividends are profits you can earn if you are one of our participating whole life policyholders – “participating” means that you are participating in company profits. Because dividends are based on overall company profitability, we cannot guarantee them, but we are very intentional about controlling our expenses and limiting our own profits to give you more.
What is cash value?
When you are a whole life policy holder, your policy includes a cash value that you can claim if you ever decide to cancel or “surrender” your policy before you pass away. The cash value increases over the time you hold the policy. You can take low-interest loans out of the cash value while still holding the policy, or you can surrender the policy to receive the entire cash value.
Do you have to pay taxes on life insurance?
Generally speaking, when the beneficiary of a life insurance policy receives the death benefit, this money is not counted as taxable income, and the beneficiary does not have to pay taxes on it.
What is an annuity?
An annuity is a long-term savings plan that provides retirement income. It is an insurance contract that serves the opposite purpose of a life insurance policy; an insurance company pays monthly annuity benefits while you are still alive. Learn more about our annuities.