What is life insurance, and what does it cover?
In Billy Wilder’s classic film noir Double Indemnity, insurance salesman Walter Neff becomes bewitched by Phyllis Dietrichson, who he meets while trying to convince her husband to renew his automobile insurance policy. (A meet-cute if we ever saw one!) Over highballs and witty repartee, Walter realizes that Phyllis actually wants to murder her husband and take his money. At first, Walter wants no part in the plan, but then (as you might have guessed!) he is rather quickly felled by her charms and ‘come hither’ stare.
This isn’t any old ‘bop him over the head’ murder though. Instead, Walter and Phyllis decide to take advantage of the double indemnity clause in Mr. Dietrichson’s life insurance policy. The provision states that should the policyholder die owing to an accident, additional benefits are paid out. Chaos, as you imagine, ensues.
While life insurance provides fodder for many a cinematic drama, real people in real life take out life insurance policies all the time. The name may sound simple enough, but what exactly does it cover, and when should you get it?
As with any policy purchase, you’ll want to start by determining your needs. Some people take out life insurance policies because they are worried about the cost of a funeral and burial; others to provide an inheritance or to offer income protection (of a sort) for their family.
Whatever your reasons, it’s important to shop around and see what’s out there. That said, it’s likely that you’ll still need to work closely with your chosen provider in order to figure out your exact premiums. Life insurance rates are based upon the risk of insuring, well, you, so deciding factors might include your medical history, age, gender, occupation, and even hobbies (do you like to cross stitch, or do you spend your weekend free climbing? The risk levels are….different.).
The policies themselves tend to come in two basic forms, known as term and whole (or permanent):
- Whole or Permanent: These policies last until the policyholder dies—as long as you pay your premiums! Most likely, your premiums will stay the same and the death benefit (morbid, we know!) won’t change. Because the payout is guaranteed, this tends to be a more expensive option.
- Term: These policies last for a specific number of years. If you outlive the policy, you do not receive a payout. While cheaper than whole or permanent policies, if you outlive your term coverage, you may be faced with setting up a new life insurance policy at a time when you might be more difficult to insure (most likely because you've aged. It’s nothing personal!)
There is, of course, variation within these two types; life insurance is really a broad name encompassing multiple coverage offerings. For example:
- Accidental death and dismemberment insurance (known as AD&D if you’re feeling pithy) covers you (and Mr. Dietrichson) if you die in an accident or lose a limb.
- Joint life insurance covers two lives, often spouses, under one policy. Payouts in this case are based upon the order of death.
Whatever your needs, it’s best to speak with your provider.
In short, life insurance can be an important element of protecting the future of your family (assuming, of course, you’re not associated with Phyllis and Walter!). Once you’ve decided to get life insurance, you can easily store your policy information in your Marble wallet, where you’ll also start earning rewards for looking after the things you care about most. If you haven’t already, you can create your Marble wallet today.