Northwestern Mutual

Life Insurance Options FAQ: What's Right For You?

Life Insurance Options

If I’m healthy and young, why would I need life insurance?

Let’s be honest: Growing old is not the only reason people die. Buying life insurance while you’re young and healthy is a way to protect your finances, regardless of how long you expect to live. Additionally, by buying now, you may be able to lock in lower rates, even if you experience health issues later. And if you choose permanent life insurance, which accumulates cash value, the sooner you buy, the more time you’ll have for that cash value to grow and be used at any age, for any reason.

I need life insurance. How do I know which kind is right for me?

To help you decide, ask yourself four questions: 1) Why do I need life insurance? 2) How much coverage do I need? 3) What is my budget? 4) What are my other financial priorities? Learn more.

How much life insurance do I need?

At a minimum, you’ll want to leave your loved ones enough to pay any debt you’ll leave behind as well as all expenses associated with the end of your life (funeral, burial, medical). If you have people who depend on you (partner, kids), you’ll also want to consider how much they will need to help maintain their current lifestyle without your income.

Here’s a life insurance calculator you can use to generate a preliminary estimate. To determine a more precise amount and to choose coverage that satisfies both your personal needs and your budget, contact one of our experts.

Should I purchase life insurance for other members of my family?

We recommend that you consider how the death of any member of your family might affect your finances. Beyond funeral and burial expenses, what might it cost to replace their contribution to the household? Whether they provide income or essential tasks like childcare, house cleaning or yard work, life insurance can help cover those costs.

If you have children, you might want to purchase coverage while they’re young. Depending on the policy, you might be able to get long-term or lifelong coverage at a low cost. And with permanent life insurance (which includes whole life insurance), you’ll be purchasing an asset that may be useful in the future, such as when they need money for college or to buy a home.

In general, the best time to get life insurance for anyone is when he or she is young and healthy; it’s easier to qualify for coverage and premiums are typically lower.

Are there any tax advantages to having life insurance?

There can be, particularly with permanent life insurance. Permanent life insurance is a financial asset that grows tax deferred. Generally, because death benefits are not considered income, beneficiaries are not taxed on a life insurance payout.

What are dividends, and why do they matter?

At Northwestern Mutual, we set premiums and establish benefits based on a certain set of assumptions. Each year, if the company's actual results turn out better than what was assumed, our policyowners may share in those favorable results through dividends.

With permanent life insurance, policyowners can use dividends to increase the value of their policy, apply them to the cost of coverage or even take them in cash. While dividends are subject to change and never guaranteed, Northwestern Mutual has paid them every year since 1872.