Life Insurance Examples: How Life Insurance Can Help Your Family

Whether you’re married with children, or you’re single and independent, life insurance can help financially protect your loved ones when you pass on. Expenses like funeral costs and outstanding debts can add up. Life insurance puts financial protection in place to give you peace of mind now that outstanding expenses will be covered.

There are lots of different life insurance policies to consider, depending on your unique financial situation and what you want to provide your loved ones, should you pass away. The following are some unique examples of how life insurance can help individuals and families secure financial protection now and in the future.

1. Married Parents with Adult Kids

Tom and Julie are 59 and 46 years old, respectively. Tom is the breadwinner of the family. He owns a small business and makes an annual income of $175K a year.

The couple’s home is paid off, and their kids are grown up. Tom wants to make sure he’s paying into a life insurance policy that will not expire and guarantee his wife receives a death benefit when he passes away. He plans to retire at 65 years old and wants to make sure his policy will remain viable beyond his having to make a monthly insurance payment.

The solution: Tom applies for an indexed universal life insurance policy with a death benefit of $100K. Tom overfunds the policy at $500 per month for the first year, then increases his payment to $700 per month from ages 60 to 64 years old. By the time Tom’s 65 years old, he has paid enough into the policy to ensure coverage will last up to age 120, without him having to continue to pay premiums. 

2. Policies to Supplement Work Life Insurance

Nancy and Richard are in their 40s and have two teenaged children. They have $120K left on their mortgage and owe $20K in miscellaneous debt.

Both parents work full-time and have $100K life insurance plans through their employers, but their coverage will end if they leave their employers. They want a private life insurance policy, attached directly to them, to ensure they’ll still have insurance if they switch or lose their jobs.

The solution: Richard and Nancy apply for $500K 30-year term life insurance policies, with living benefits attached. The living benefits will pay a portion of the death benefit early, in the event of a critical, disabling or terminal illness. Their private policy will provide enough coverage to cover the cost of their home, remaining debt and outstanding expenses, if one of them were to pass away.

3. Building Retirement Income with Life Insurance

Ming and Marcus are in their mid-30s. Marcus is the breadwinner, while Ming works inside the home, taking care of their young children. Marcus doesn’t have life insurance yet and wants a substantial death benefit, as well as a policy that builds retirement income as he pays premiums. 

The solution: Marcus applies for an indexed universal life insurance policy with a death benefit of $900K. To build out the cash value portion of the policy to supplement his retirement income, he considers a $100K initial out-of-pocket premium payment, also called a premium outlay. To keep the initial cost of insurance low, he opts to split that into $50K for year one and $50K for year two. Then, he will pay $24K per year until the age of 65 to optimize the cash value growth. 

Assuming Marcus is relatively healthy and is approved for a standard rate, conservative estimates show he’d be able to take out $150K per year from the policy from the ages of 65 to 100 years old. 

4. Term Life Insurance Policies to Cover Debt & More

Isaiah and Ava have three young kids. Isaiah is the main provider for the family, while Ava works inside the home taking care of the kids. Isaiah has an income of $100K per year. The couple owes $350K on their house, $35K on vehicles and $15K in miscellaneous debt.

The solution(s): Isaiah and Ava have several term life insurance policy solutions to choose from.

1. Isaiah can purchase a term life insurance policy with a death benefit of $400K to pay off outstanding debts.
2. Isaiah can purchase a term life insurance policy with a death benefit of $500K to pay off outstanding debts and cover burial and miscellaneous expenses.
3. Isaiah can purchase a term life insurance policy with a death benefit of $1.5M to pay off outstanding debts and offer replacement income, so Ava doesn’t have to worry about getting a job immediately. 
4. Ava can get a term life insurance policy with a death benefit of $500K to help with end-of-life expenses and get extra financial help to pay for someone to take care of the kids while Isaiah continues to work.

5. Term Life Insurance for Peace of Mind

Liam and Sarah have three children who live at home. They each make $100K, totaling a household income of $200K. Their debt includes $600K on their house, $70K on vehicles and $30K in miscellaneous debt. They’re both 35 years old and are in good health. 

The solution(s): Liam and Sarah have different low-cost term life insurance options that ensure their family’s covered.

1. Liam and Sarah can both purchase a term life insurance policy each with a death benefit of $700K to pay off debt in case one of them passes away. A 10-year term life insurance policy would roughly cost them each $50 per month.
2. Liam and Sarah can both purchase a term life insurance policy each with a death benefit of $2M to pay off debt and offer income replacement in case one of them passes away. This option offers the family more insulation and would roughly cost them each $100 per month.

6. Disability & End-of-Life Insurance Coverage

Tim is a 40-year-old single man with no debt. He’s very active and relatively healthy, but he wants to ensure his family doesn’t have to pay for his end-of-life expenses, like a funeral and burial costs, should he pass away. 

The solution(s): From term life insurance to whole life insurance that builds up cash value, Tim has several options.

1. Tim can purchase a $100K term life insurance policy with a 10-year term. He would pay roughly $30 per month during the term.
2. Tim can purchase a $100K whole life insurance policy that doesn’t expire and that builds up cash value as Tim pays his premiums. At his age, in his good health condition, Tim would pay roughly $100 a month. His payments will accrue cash value Tim may be able to access later in life. 
3. Tim can purchase a $300K universal life insurance policy that includes disability and long-term care coverage. This helps ensure Tim is covered in case he experiences a disability-causing accident, as he’ll be able to supplement his lost income with the policy. Tim would pay roughly $200 a month. 

7. Long-Term Care Coverage 

Delores and John are both 50, are both in good health and are closing in on retirement. They’ve paid off all their debts, but they’ve witnessed a relative who needed long-term care and saw how expensive it was. They want to ensure they’re covered in case they need long-term care in the future, too.

The solution(s): Since long-term care life insurance policies can take different forms, here are a couple sample options.

1. Delores and John purchase a long-term care life insurance policy that would cover each of them up to $8K per month for 5 years in a nursing home. At their age, in their health conditions, the monthly premiums would be around $400 per policy.
2. Delores and John purchase a universal life insurance policy with a $400K death benefit, and attach a long-term care rider that would also cover each of them up to $8K per month for 4 years in a nursing home. At their age, in their health conditions, the monthly premiums would be around $400 per policy.

Consult a Life Insurance Professional to Explore Your Options



The above scenarios are just a few ways life insurance can over financial protection for diverse individuals and families. You can learn more about different life insurance options in our post on how to choose the right life insurance policy. 

We recommend talking with a life insurance agent about the most cost-effective options that provide you and your family with adequate coverage. Life insurance can give you peace of mind now that no matter what happens, your loved ones are financially protected. 

Contact us online to get a free life insurance quote, or call 602.617.4107 to talk with one of our licensed life insurance brokers.