Why life insurance matters

Life insurance provides essential financial protection for your loved ones in the event of your death. If you were to pass away unexpectedly, life insurance may help ensure your family can maintain their lifestyle and meet financial obligations. According to industry data, nearly half of U.S. households would feel the financial impact of losing their primary wage earner within just six months. 40% say their loved ones would be barely or not at all financially secure should the primary wage earner die unexpectedly.¹

Choosing the right type of life insurance – permanent life insurance or term life insurance, is key to helping secure your family’s future.

Learn more: 10 Life Insurance Mistakes and How to Avoid Them

What is term life insurance?

Term life insurance offers coverage for a specific period, typically 10, 20 or 30 years. You pay premiums during the term, and if you pass away within that time, your beneficiaries receive the death benefit. Once the term ends, the coverage expires and you stop paying premiums.

Why choose term life insurance?

•  Term life is generally the most budget-friendly option.
• Temporary needs. Ideal for covering short-term financial responsibilities like:
  1. Mortgage or debt repayment.
  2. Children’s education.
  3. Income replacement during working years.

If your financial obligations will decrease over time, term life insurance may be the right fit.

Learn more about term insurance from Ameritas or get an instant quote to see how affordable term can be for you.

What is permanent life insurance?

Permanent life insurance provides lifelong coverage. Unlike term policies, it doesn’t expire as long as premiums are paid. It also includes a cash value component that grows over time and can be accessed for various financial needs.

Benefits of permanent life insurance:

• Lifetime protection. Coverage that lasts your entire life.
• Cash value growth. Builds tax-deferred savings you can use for:
• Retirement income.
• College tuition.
• Emergency expenses.
• Starting a business.

Permanent life insurance offers flexibility and long-term financial planning advantages.

Types of permanent life insurance

Whole life insurance

• Guaranteed premiums, death benefit and cash value.*
• Potential to earn dividends.

Universal life insurance

• Flexible premium amount and frequency.
• Adjustable coverage levels.

Indexed universal life insurance

• Cash value growth tied to a market index.
• Built-in protection against market downturns.

Explore Ameritas permanent life insurance options to find the right fit for your goals.

The cost of waiting

Buying life insurance early can save you money. Premiums are lower when you’re younger and healthier. With permanent life insurance, starting sooner also means building cash value earlier, giving you more financial flexibility down the road.

Term vs. permanent life insurance

Choosing between permanent life insurance and term life insurance depends on your financial goals, budget and stage of life. Term life may be ideal for temporary needs, while permanent life insurance supports long-term planning and wealth-building.

Have more questions about term life insurance versus permanent life insurance? Contact a financial professional to learn more.

¹2025 Facts About Life Insurance Sheet

Disclosures

*Guarantees are based on the claims-paying ability of the issuing company. Policies, index strategies and riders may vary and may not be available in all states.

Loans and withdrawals will reduce the policy’s death benefit and available cash value. Excessive loans or withdrawals may cause the policy to lapse. Unpaid loans are treated as a distribution for tax purposes and may result in taxable income.

Representatives of Ameritas do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your specific situation.

In approved states, life insurance is issued by Ameritas Life Insurance Corp. In New York, life insurance is approved by Ameritas Life Insurance Corp. of New York.

Policies, index strategies and riders may vary and may not be available in all states. Optional riders may have limitations, restrictions, and additional charges.

Employer life insurance is a valuable benefit that many companies offer as part of their employee benefits package. It provides group life insurance coverage to eligible employees, often at little or no cost. While convenient and cost-effective, employer-sponsored life insurance may not be sufficient to meet all your financial protection needs, especially if you have dependents or long-term financial goals.

In this article, we’ll explore the key features of employer life insurance, compare it to individual life insurance, and help you determine the best strategy for protecting your loved ones.

What is employer life insurance?

Employer life insurance is a group policy provided by an employer to its employees. It typically includes basic coverage, such as one or two times your annual salary, and may offer the option to purchase additional coverage at discounted group rates.

Key features of employer life insurance:

• Employer-sponsored premiums: Employers often pay for basic coverage, making it a cost-effective way to secure life insurance. Employees can usually buy supplemental coverage at lower rates than individual policies.
• Simplified underwriting: Most employer life insurance policies do not require a medical exam. This makes coverage accessible to employees with pre-existing health conditions or those who might otherwise struggle to qualify for individual coverage.
• Limited customization: Coverage amounts are often tied to salary multiples, and options for riders or policy enhancements are minimal.
• Portability concerns: Coverage typically ends when you leave your job. Some plans offer conversion options, but these can be expensive or limited.
• Cost-effective coverage: Group rates and employer subsidies make this an affordable way to secure basic life insurance protection.

Individual life insurance vs. employer life insurance

While employer life insurance offers convenience, individual life insurance provides greater flexibility, control and long-term protection. Here’s a side-by-side comparison:

4 questions to ask about employer life insurance

Before relying solely on employer life insurance, consider these important questions to ensure your coverage aligns with your financial needs.

1. Are you in good health?

If you’re young and healthy, you may qualify for lower premiums with an individual policy. While employer life insurance is beneficial for those with health issues, it may not offer the best rates for healthy individuals. Individual policies often have more rate classes, rewarding good health with lower premiums.

Tip: Compare quotes from individual insurers to see if you can get better coverage for a similar or lower cost.

2. Is your group coverage discounted?

Many employees sign up for employer life insurance because it’s free or heavily discounted. While this is a great perk, it’s important to assess whether the coverage amount is sufficient. A basic policy may not cover your mortgage, debts or future expenses like college tuition.

Tip: Conduct a life insurance needs analysis to determine if you need supplemental coverage.

3. What happens if you leave your job?

Employer life insurance is tied to your employment. If you change jobs, retire or are laid off, your coverage may end. Some policies offer conversion options, allowing you to switch to an individual policy, but these can be costly and may offer reduced benefits.

Tip: Consider purchasing an individual policy while you’re still employed to avoid gaps in coverage later.

4. Do you have adequate coverage?

Group policies often cap coverage at a multiple of your salary, which may not be enough for families with dependents or long-term financial obligations. Individual policies allow you to choose higher coverage amounts and add riders for extra protection.

Tip: Use online calculators or consult a financial professional to determine your ideal coverage amount.

This article can also help: Do You Have Enough Life Insurance?

Customization and flexibility: why individual life insurance matters

One of the biggest advantages of individual life insurance is the ability to tailor your policy to your unique needs. You can choose between term life, whole life or universal life insurance. You can customize your policy by adding extra features, called riders, to help meet your current and future life insurance needs. These riders allow you to:

• Help ease the financial strain of a serious medical condition by providing a part of your policy’s death benefit while you’re living.
• Provide more money to your beneficiaries if your death is accidental.
• Keep your policy in force or pay your policy’s premiums if you become disabled.
• Provide a guaranteed stream of payments for life, helping to supplement your retirement income needs.

These options provide added protection and flexibility that employer life insurance typically doesn’t offer.

Read this article to understand the difference between permanent and term life insurance.

Combining employer and individual life insurance

There’s no one-size-fits-all when it comes to life insurance. Many people benefit from combining employer life insurance with an individual policy to ensure comprehensive protection.

Why combine?

• Employer life insurance provides basic, affordable coverage.
• Individual life insurance offers long-term protection, customization and portability.

By layering both types of coverage, you can protect your family from unexpected financial hardship while maintaining flexibility as your career and life evolve.

Choosing the right life insurance strategy

Employer life insurance is a valuable benefit that offers affordable, accessible coverage, especially for those with health concerns or limited budgets. However, it may not provide the level of protection needed for long-term financial protection.

Individual life insurance gives you control and flexibility. It’s well-suited for those who want to tailor their coverage to their financial goals, family needs and future plans.

Key takeaways:

• Don’t rely solely on employer life insurance for long-term protection.
• Evaluate your financial situation, health status and coverage needs.
• Consider combining employer and individual policies for comprehensive coverage.
• Consult a licensed financial professional to create a personalized life insurance strategy.

Explore life insurance options from Ameritas to find the right coverage for your needs and goals.

In approved states, life insurance is issued by Ameritas Life Insurance Corp. In New York, life insurance is issued by Ameritas Life Insurance of New York. Policies and riders may vary and may not be available in all states. Optional riders may have limitations, restrictions, and additional charges.

Life insurance is a valuable financial tool that provides for loved ones after death. However, policies with living benefits offer additional value by allowing access to funds in the event of a critical, chronic or terminal illness while you’re still living. When considering your life insurance needs, you may be wondering whether to opt for term life insurance or permanent life insurance. Both types of policies have their advantages and disadvantages, which can make choosing between them a daunting task. Read this blog to learn more about their differences. However, pairing term life insurance with living benefits with a permanent life policy that also offers living benefits can provide an effective strategy for many individuals.

This approach balances affordability with a long-term focus, helping to ensure financial protection while keeping premiums manageable.

Understanding term and permanent life insurance with living benefits

Before diving into the strategy, it’s important to understand how term and permanent life insurance with living benefits function.

Term life insurance with living benefits

• Provides coverage for a specific period, like 10, 20 or 30 years.
• Lower premiums compared to permanent life insurance.
• Includes living benefits that allow policyholders to access a portion of the death benefit in the event of a qualifying illness (critical, chronic or terminal).
• Policy expires at the end of the term unless converted or renewed.

Permanent life insurance with living benefits

• Provides lifelong coverage as long as premiums are paid.
• Includes a cash value component that accumulates over time.
• Also features living benefits, similar to term policies, allowing access to funds in case of serious illness.
• Typically has higher premiums, but it builds cash value.

Using term benefits first

This strategy involves combining two policies: one for term life insurance and another for permanent life insurance, both with a living benefits rider. Using the term benefits first involves strategically accessing the living benefits of your term life insurance policy before tapping into your permanent policy. Here’s three reasons this can be beneficial.

1. Immediate financial relief: If you face a serious illness, accessing the living benefits of your term policy can provide immediate financial relief. This can help cover medical expenses, in-home care or other costs without depleting your savings or the cash value of your permanent policy.

2. Preserve permanent policy value: By using the term policy’s living benefits first, you preserve the cash value and death benefit of your permanent policy. This helps ensure that your permanent policy remains intact for future needs, such as supplementing retirement income or leaving a legacy for your heirs.

3. Flexibility and control: This approach gives you greater flexibility and control over your financial resources. You can decide when and how to use the living benefits based on your specific circumstances and financial goals.

How it works

Here’s how pairing term life insurance with living benefits works.

1. Start with term life insurance for maximum immediate coverage

You could start by purchasing a term life insurance policy with living benefits, giving you a higher coverage amount at an affordable premium. For example, you might choose a $500,000 term policy for a 20-year term. If you experience a qualifying illness during that time, you can access a portion of the death benefit through the living benefits feature to help cover medical bills, lost income or other expenses.

2. Maintain a permanent policy for long-term protection

At the same time, you could purchase a permanent life insurance policy with living benefits, with a smaller or equal amount of coverage. This ensures you have some level of lifelong coverage, and because it also includes living benefits, you still have access to those features even after your term policy expires.

3. Use the term policy’s living benefits first

If you face a qualifying illness, you could use the living benefits from your term policy first. This allows you to tap into the larger, more affordable coverage while preserving your permanent policy’s cash value and long-term death benefit. Since term insurance costs less than permanent coverage, this approach helps you maximize the benefits available during the years when your financial obligations (like a mortgage or raising children) are highest.

4. Convert or transition to permanent coverage over time

As your financial situation improves, you have options to increase your long-term protection:

• You could convert all or part of your term policy into permanent life insurance, locking in lifelong coverage without needing to requalify based on your health.
• Even if you choose not to convert, your permanent policy will remain in force after the term coverage expires, helping to ensure you still have living benefits and a death benefit available for your entire life.

Hypothetical example

• John and Sarah, ages 42 and 40
• Two children, ages 10 and 12

John and Sarah wanted strong life insurance protection without overspending. They also needed a safety net in case of a serious illness. They combined term and permanent life insurance, both with living benefits.

Step 1: Term Life Insurance ($750,000, 20-year term)

• Affordable higher amount in coverage for immediate needs.
• Living benefits provide early access to funds for medical expenses.

Step 2: Permanent Life Insurance ($250,000, Whole Life)

• Lifelong coverage with cash value accumulation.
• Living benefits for funds in case of a future serious illness

How it helped:

At age 50, John faced a serious heart condition. They used his term policy’s living benefits to cover:

• $75,000 in medical bills
• $50,000 in lost income
• $25,000 in home modifications

Their permanent policy remained intact, ensuring long-term protection.

Why this strategy makes sense

Pairing term and permanent life insurance with living benefits provides several advantages.

Cost-effective protection in early years: Many individuals cannot afford a large permanent policy upfront. Using term life for higher coverage initially allows for protection at a lower cost.

Access to more living benefits when needed: Serious illnesses often occur unexpectedly. With a larger term policy, policyholders can access more funds through living benefits if needed.

Long-term protection without overcommitting financially: Securing a smaller permanent policy early helps ensure policyholders have lifelong coverage while maintaining flexibility in their budget.

Flexibility to adjust coverage over time: The ability to convert term insurance into permanent coverage allows policyholders to adapt their protection as financial circumstances change.

By combining term and permanent life insurance with living benefits, individuals can maximize coverage while maintaining financial flexibility. This structured approach provides a balance between affordability and long-term protection, adapting to changing financial circumstances over time.

Representatives of Ameritas do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your specific situation.

The Accelerated Death Benefit riders are not a long-term care product.

Loans and withdrawals will reduce the policy’s death benefit and available cash value. Excessive loans or withdrawals may cause the policy to lapse. Unpaid loans are treated as a distribution for tax purposes and may result in taxable income.

In approved states, life insurance is issued by Ameritas Life Insurance Corp. In New York, life insurance is issued by Ameritas Life Insurance of New York. Policies and riders may vary and may not be available in all states. Optional riders may have limitations, restrictions, and additional charges.

The sandwich generation finds itself in a unique and often challenging position. These are individuals who simultaneously provide financial support for their children—often adult children—while also caring for aging parents, and in some cases, grandparents. With increasing life expectancies and rising costs of living, this dual responsibility can create significant financial strain. By understanding the unique challenges of this role and planning effectively, members of the sandwich generation can better navigate their financial futures.

The growing financial risk of caregiving

As people live longer—often into their 80s, 90s and beyond—the probability of spending time caring for older generations grows. While many people focus their financial planning on retirement and college savings, fewer account for the potential need to provide financial or caregiving support to aging relatives.

This oversight can leave families unprepared for the reality of rising healthcare costs, extended caregiving responsibilities and the emotional toll of juggling multiple roles. To create a comprehensive financial strategy, it’s essential to account for these possibilities and prepare for the financial risks they pose.

Planning beyond retirement and college

To meet the demands of providing for both children and aging relatives, families must think beyond traditional financial milestones like retirement and college savings. Here are some key considerations:

• Anticipate parenthood responsibilities beyond childhood – Raising children comes with substantial costs, including education, extracurricular activities and healthcare. However, financial responsibilities often don’t end when children reach adulthood. Many parents find themselves supporting young adults through college or early career challenges.
• Prepare for unpaid caregiving and guardianship roles – Many adults are unprepared for the possibility of becoming unpaid caregivers for their parents or grandparents. These roles often come with additional costs, such as home modifications, medical equipment or even the loss of income due to reduced work hours.
• Consider the financial strain of multi-generational support – Supporting multiple generations can strain even the most well-thought-out budget. Understanding and planning for these scenarios can help mitigate financial stress.

Key areas to address

To prepare for the financial demands of being in the sandwich generation, consider the following areas.

Higher education expenses

College tuition continues to rise, and many parents feel obligated to assist their children with these costs. Balancing contributions to education funds with other financial priorities is critical. It may involve exploring options like scholarships, grants and work-study programs to reduce the financial burden. Parents should also evaluate how much they can reasonably contribute without compromising their retirement savings.

Supplementing living expenses

Whether it’s helping a young adult child with rent or covering a parent’s living expenses, these supplementary costs can add up quickly. Establishing boundaries and clear expectations can help manage these expenses. For adult children, this might mean setting time limits on financial assistance or requiring contributions to household costs. For aging parents, reviewing government benefits and community resources can provide additional support.

Disability or income interruption

A sudden loss of income due to disability or caregiving responsibilities can devastate a family’s financial stability. Disability income insurance and an emergency savings fund are essential safeguards. Families should consider the potential need for one spouse to reduce working hours or leave a job to provide caregiving and plan for this possibility financially.

Sufficient savings and insurance

Having adequate life and health insurance policies helps ensure financial security in the event of unforeseen circumstances. Some life insurance policies include living benefits called accelerated death benefit riders. These riders may allow you to access a portion of your policy’s death benefit if you are diagnosed with a chronic illness (inability to perform at least two of the six activities of daily living), certain critical illnesses, or a terminal illness (with a diagnosis of 12 months or less to live). This feature can help ease the financial strain associated with such conditions. This blog will explain how life insurance can help pay for a serious illness in retirement.

Late-life healthcare expectations

Healthcare expenses are a significant concern for aging individuals. Long-term care insurance and a clear understanding of Medicare or other benefits can help alleviate this burden. Families should also explore healthcare savings accounts and ensure that medical directives and living wills are in place to guide decision-making.

Powers of attorney

Designating a trusted individual to make medical and financial decisions in the event of incapacitation is a crucial part of financial preparedness. This ensures that the family’s wishes are respected and can help avoid costly legal disputes. Additionally, reviewing and updating beneficiaries on all accounts is crucial to prevent legal complications. It’s important to review these documents regularly and update them as needed.

Property, guardianship and executor roles

As families age, issues of property ownership, legal guardianship and estate management often arise. Having clear legal documents in place, such as wills and trusts, simplifies these transitions. Discussing these plans openly with family members can reduce misunderstandings and ensure a smooth process when the time comes. Learn about the basics of estate planning in this blog article.

Emotional costs of caregiving

While not strictly financial, the emotional toll of caregiving can impact productivity and decision-making. Budgeting for occasional respite care or therapy can provide the necessary support to maintain balance and avoid burnout.

Practical steps to take

1. Have honest family discussions – Open communication with children and aging parents about financial expectations and needs can reduce misunderstandings and ensure everyone is on the same page.
2. Seek professional guidance – Financial professionals, elder care specialists and estate attorneys can help navigate the complexities of multi-generational financial strategies.
3. Leverage available resources – Explore community programs, tax benefits and employer-sponsored benefits to help offset costs associated with caregiving and support.
4. Set boundaries and prioritize – While it may feel difficult, setting clear financial boundaries and balancing long-term security over short-term needs is essential.

The sandwich generation faces unique financial pressures that require proactive planning and thoughtful decision-making. By addressing the potential challenges of supporting both younger and older generations, individuals can create a financial roadmap that supports their family’s long-term well-being. With preparation, this generation can navigate their dual roles with confidence and care, ensuring a more secure future for themselves and their loved ones.

If you’re in the market for life insurance, you might feel overwhelmed by the many choices available. A common path is to buy a single term life policy that provides a fixed amount of coverage for a set number of years. However, there’s an alternative strategy that could be both more strategic and flexible: laddering life insurance policies. This involves combining multiple term policies, or a mix of term and permanent life insurance policies, to match your coverage to your financial needs over time.

In this article, you’ll learn how laddering life insurance policies work, why it can be a more flexible strategy over the long-term and the added benefits that permanent insurance can offer when integrated into your coverage plan.

What is laddering life insurance policies?

Laddering involves buying multiple policies with different coverage periods and/or types of life insurance, typically based on your expected financial obligations at various stages of life. For instance, you might buy one term policy to cover your mortgage for 20 years and another term policy to cover your children’s education for 10 years. As your financial obligations decrease (mortgage is paid off, children graduate), so does the need for certain levels of life insurance coverage.

Read our blog to learn about the differences between permanent and term life insurance.

Laddering life insurance is a flexible option

Only pay for the coverage you need

With a single large term life policy, you often end up paying for more coverage than you need at various stages in life. For example, buying a 30-year term policy for $1 million might provide enough coverage for your children’s college years and your spouse’s financial security after your passing, but what happens after those primary needs are met? You might still be paying the same premium for the $1 million coverage even when your children are financially independent, or your mortgage is paid off.

Laddering policies ensures you’re not paying for coverage you no longer need. With a more tailored approach, you only pay for coverage during the periods when you have the most financial responsibility. You could have one policy end when your mortgage is paid, another end when your children finish college, and a smaller, longer-term policy that provides for your spouse or estate needs.

Avoid paying high premiums at older ages

One of the most significant advantages of laddering policies is that it helps you avoid the high premiums associated with life insurance as you age. By structuring term policies so they gradually expire when they’re no longer necessary, you prevent being locked into costly annual renewable term rates, which can become prohibitively expensive in your 50s and 60s.

Instead of being faced with renewing one large policy at a higher rate as you age, laddering allows you to drop coverage as your needs diminish, keeping costs lower over the long term.

Case study: laddering policies

Here’s a hypothetical example to understand the benefits of laddering policies.

Tara, a 33-year-old mother of two, works with her financial professional to determine that she needs $750,000 in life insurance coverage. Her financial obligations are as follows:

• $250,000 for mortgage protection – with 20 years remaining on her mortgage.
• $250,000 to cover her children’s college expenses – a 15-year need.
• $250,000 for final expenses and legacy planning – a long-term need.

Tara has two main options for securing life insurance:

Option one: Buying a single 30-year term policy for $750,000.

• Annual premium: $223
• Total cost over 30 years: $6,690

Option two: Laddering policies based on specific needs.

· $250,000 15-year term (for children’s college expenses)

• Annual premium: $155
• Total cost: $2,325

· $250,000 20-year term (for mortgage protection)

• Annual premium: $168
• Total cost: $3,360

· $250,000 permanent policy (for legacy/final expenses)

• Annual premium: $878
• Total cost: $26,327 over 30 years

· Total cost for laddering policies: $32,012

When we delve deeper into the benefits, laddering can provide advantages over the long-term.

The benefits of laddering life insurance

1. Flexibility and lifetime coverage: A permanent policy also provides lifelong coverage. If Tara outlives her term policies, the permanent policy continues to provide coverage for her legacy and final expense needs. Had Tara bought only the single 30-year term policy, she would have faced a decision at age 63: either convert part of the term policy into permanent coverage or let it lapse.

• If she were to convert $250,000 into a permanent policy at age 63, the annual premium would jump to $3,551, potentially making continued coverage cost prohibitive.
• If she chose not to convert, she would lose the coverage entirely, along with the $6,690 spent on premiums with no financial recovery.

2. Pay for only what you need: Tara’s financial needs vary over time. By laddering her policies, she’s paying for coverage aligned with specific obligations. The 15-year term covers her children’s education, while the 20-year term aligns with her mortgage timeline. After these needs expire, she’s left with only the permanent policy to cover long-term expenses, avoiding overpaying for unneeded coverage.

3. Access to living benefits: Many permanent life insurance policies include options such as a living benefits rider, which allows access to part of the death benefit if you’re diagnosed with a serious medical condition. This can be a valuable resource to help protect savings and cover medical expenses in later years. A permanent policy may offer Tara:

• $187,500 for terminal illness.
• $125,000 for chronic illness.
• $62,500 for critical illness.

Check out our blog about How to Pay for a Serious Illness in Retirement to learn more about the living benefits Ameritas offers.

4. Cash value accumulation: The permanent policy’s cash value also plays a critical role in the overall strategy. A permanent policy can build cash value over time, which can be used as an additional source of funds in retirement or an emergency if needed.1 By the time Tara reaches age 63, the cash value of her policy is projected to be approximately $30,314.

Consider your options

Laddering term and permanent life insurance policies in some scenarios may be a more cost-effective and flexible approach to managing your life insurance needs over time. This strategy allows you to match your coverage with your financial obligations, helping to ensure you’re only paying for the coverage you need. Learn more about permanent life insurance and term insurance from Ameritas.

Additionally, incorporating a permanent life insurance policy into your ladder can provide added benefits, such as living benefits and lifelong protection, which can help you meet your long-term financial goals. By balancing term and permanent policies, you can help achieve optimal coverage and financial flexibility for both today and the future. Consult with a financial professional to customize a strategy just right for you.

Estate planning is essential for everyone, regardless of the size of the estate. Life insurance plays a crucial role in various aspects of estate planning, helping provide financial security to your loved ones. Here are 10 ways to use life insurance in estate planning for modest estates.

1. Estate tax

Some states impose estate or inheritance taxes on estates as low as $1 million. Even if your estate falls below the federal estate tax exemption, state-level taxes can still take a significant portion of your assets. Life insurance can be used to protect the assets you have worked hard to build, helping you pass on more to your loved ones. The death benefit from a life insurance policy can cover these taxes, preventing the need to liquidate other assets.

2. Income replacement

Life insurance is vital for protecting young families from the financial impact of an untimely death. In the event of a family member’s death, life insurance can cover:

• Liabilities remaining post-death: Any outstanding debts, including mortgages, car loans and credit card balances can be paid off using the death benefit.
• Income replacement amount & duration: The policy can provide ongoing financial support to replace the deceased’s income, ensuring that the family can maintain their standard of living.
• Funeral costs: Life insurance can cover funeral and burial expenses, which can be a significant financial burden.
• Education expenses: Funds can be set aside for children’s education, helping secure their future.

3. Creditor protection

Life insurance cash surrender value and/or the death proceeds can be protected from creditors, with state-specific variations. In many states, the proceeds are protected if the beneficiaries are spouses, children or other dependents. This protection ensures that your loved ones receive the intended benefits without interference from creditors.

4. Avoiding probate

Probate can be costly and delay your loved ones from accessing the money they need. The probate process can take six to nine months or longer, during which your assets are tied up in legal proceedings. Life insurance can help you avoid probate because the death benefit is paid directly to the named beneficiaries, allowing them to access the funds immediately and bypass the probate process.

5. Second marriages

Life insurance can simplify estate planning in second marriages, especially when children from previous marriages are involved. It allows the insured to provide for a current spouse while ensuring children from previous marriages inherit directly. This arrangement helps balance the needs of both the spouse and children, avoiding potential conflicts and ensuring fair distribution.

6. Estate equalization

Life insurance can equalize estates where family businesses or other significant assets complicate equal distribution among children. If one child inherits a business or property, life insurance can provide an equivalent amount to other children, ensuring fairness. This approach helps prevent disputes and maintains family harmony.

7. Tax and retirement

Traditional retirement plans are effective for wealth accumulation but inefficient for wealth distribution due to double taxation. If much of your wealth is tied up in tax deferred assets, such as a 401(k) or IRA, it could be fully taxed to the beneficiaries at their income tax rate when transferred to them. This tax treatment immediately decreases the net value of the inheritance. The generally income tax-free death benefit provided by life insurance can help minimize these adverse tax implications.

8. Charitable gifting

Life insurance can be used to leverage dollars regularly donated to a favorite charity by naming a charity as the owner and/or beneficiary of a life insurance policy. In more complex charitable gifting strategies, a wealth replacement trust may be considered. This allows you to support charitable causes while providing for your family’s financial needs.

9. Protect your legacy and charitable giving power

Life insurance can reduce gift taxes when passing on a primary residence through a Qualified Personal Residence Trust. It can also reduce the taxable gift to family members using a Grantor Retained Income Trust and provide tax benefits on appreciated property gifted to charities through a Charitable Remainder Trust, with the estate’s value preserved for heirs. These strategies help maximize the impact of your charitable giving and protect your legacy for future generations.

10. Funding special needs trusts

For families with a member who has special needs, life insurance can fund a special needs trust. This type of trust ensures that the individual with special needs receives financial support without jeopardizing their eligibility for government benefits. The death benefit from a life insurance policy can be directed to the trust, providing a reliable source of funds for medical care, living expenses and other needs. This approach helps families know their loved one will be cared for after they are gone.

Estate planning is not just for the wealthy. It’s for everyone who wants to ensure their loved ones are taken care of and their wishes are respected. Learn more in our blog, Understanding the Basics of Estate Planning. Life insurance is a versatile tool that can address various needs in estate planning, from covering estate taxes and replacing income to protecting assets from creditors and avoiding probate. By understanding these 10 uses of life insurance, you can create a comprehensive estate plan that helps provide financial security for you and your loved ones.

This information is for informational purposes only. It is not intended as tax or other legal advice. For application of this information to your specific situation, you should consult an attorney.

Life insurance is a crucial part of any financial strategy, helping provide security for your loved ones in the event of your untimely death. However, many people make common mistakes when purchasing or managing their life insurance policies. These errors can lead to inadequate coverage, unnecessary expenses or even denial of claims. Here are 10 life insurance mistakes and how you can avoid them.

1. Not buying enough coverage

One of the most significant mistakes people make is not purchasing enough life insurance coverage. Many underestimate the amount needed to support their family, pay off debts and cover future expenses like education costs. Read our blog to make sure you have enough life insurance coverage.

How to avoid: Calculate your needs based on your income, debts and future financial goals. Consider factors such as mortgage, children’s education and daily living expenses. Use online calculators or consult with a financial professional to determine an appropriate coverage amount.

2. Relying solely on employer-provided life insurance

Employer-provided life insurance is a convenient benefit, but it often provides limited coverage, typically only one to three times your annual salary. This amount may not be sufficient for your family’s long-term needs.

How to avoid: Evaluate your needs independently of your employer’s policy. Consider purchasing additional individual life insurance to supplement your coverage to help ensure your family’s financial security. Learn more in our blog about questions to ask when considering employer life insurance.

3. Delaying the purchase of life insurance

Procrastination can lead to higher premiums or, worse, the inability to obtain coverage due to health issues. The younger and healthier you are when you purchase life insurance, the lower your premiums will be.

How to avoid: Don’t wait. Purchase life insurance as soon as you recognize the need for it. The longer you delay, the more you risk paying higher premiums or facing coverage denial due to health changes.

4. Choosing the wrong type of life insurance

There are various types of life insurance, including term, whole life and universal life insurance. Each serves different needs and financial goals. Selecting the wrong type can lead to inadequate coverage or unnecessary expenses. Learn more in our blog about the differences between permanent and term life insurance.

How to avoid: Understand the differences between term and permanent life insurance. Term life insurance is generally more affordable and provides coverage for a specific period, while permanent life insurance offers lifelong coverage and builds cash value. Consult with a financial professional to determine which type best suits your needs.

5. Failing to review and update your policy

Life changes, such as marriage, the birth of a child or a significant increase in income can affect your life insurance needs. Failing to review and update your policy can result in inadequate coverage.

How to avoid: Regularly review your life insurance policy, especially after major life events. Update your coverage and beneficiaries as needed to ensure your policy aligns with your current circumstances.

6. Not comparing quotes from multiple insurers

Life insurance premiums and features can vary significantly between insurers. Accepting the first quote you receive without shopping around can result in higher costs and missed opportunities for added benefits.

How to avoid: Obtain quotes from multiple life insurance companies. Compare the coverage, premiums and policy features to find what best suits your needs. Working with a financial professional can help simplify this process.

7. Overlooking the importance of a medical exam

Some life insurance policies require a medical exam to determine your health status and set premiums accordingly. Skipping the medical exam may seem convenient, but it often leads to higher premiums or limited coverage.

How to avoid: If you’re in good health, opt for a policy that requires a medical exam. This can lead to lower premiums and better coverage options. If you have health issues, work with a financial professional to find policies that offer favorable terms for your condition.

8. Naming the wrong beneficiary

Naming an incorrect or outdated beneficiary can lead to legal complications and delays in claim payments. Common mistakes include naming minor children without establishing a trust or failing to update beneficiaries after a divorce.

How to avoid: Carefully choose and regularly update your beneficiaries. Consider naming a trust or an adult guardian if your beneficiaries are minors. Review and update your beneficiary designations after major life events to ensure they reflect your current wishes.

9. Not understanding policy exclusions and limitations

Every life insurance policy has exclusions and limitations that can affect claim payouts. Common exclusions include suicide within the first two years of the policy and deaths resulting from illegal activities.

How to avoid: Thoroughly read and understand your policy’s terms and conditions. Ask your financial professional to explain any exclusions or limitations. Knowing these details can prevent unpleasant surprises and help ensure your loved ones receive the benefits you intended.

10. Canceling a policy without considering alternatives

Canceling a life insurance policy without considering alternatives can leave your family unprotected. Additionally, if you decide to purchase a new policy later, you may face higher premiums due to age or health changes.

How to avoid: Before canceling a policy, evaluate the reasons for your decision. If you’re seeking lower premiums, consider adjusting your current policy’s terms or coverage amount. Discuss alternatives with your financial professional to avoid gaps in coverage.

Avoiding these common life insurance mistakes can help you secure the right coverage for your needs and help ensure your family’s financial future. By understanding your needs, regularly reviewing your policy and seeking professional advice, you can make informed decisions and help avoid costly errors. Remember, life insurance is a long-term commitment and an essential part of your overall financial strategy. Taking the time to get it right can help provide financial security for you and your loved ones.

It is important to prepare and protect your loved ones with life insurance for when they need it most. Having the right amount of life insurance can eliminate additional burdens from financial stress. What if you died tomorrow and were no longer around to provide for your family? Do you have enough life insurance?

Most people are aware of the financial protection life insurance offers, but many say they don’t have enough.¹ Without your income and the other things you do for your loved ones, could they maintain their lifestyle and keep their future plans on track? Life insurance is there to help pay for things like college tuition, childcare, mortgages and other everyday living expenses. It also allows your loved ones to be better able to reach their long-term goals after you’re gone.

It’s important to understand the amount of life insurance a person should have. Life insurance helps ease the financial burden on your family should something happen to you and may provide important living benefits. No matter what stage of life you’re in, if someone depends on you financially, you should consider protecting their future with life insurance. There are several factors to consider when figuring out if you have enough life insurance. You will need to pay close attention to your current income, number of dependents, existing coverage, current savings and other debt or financial responsibilities.

Continue reading to learn more about the amount of life insurance you need and why it’s an important part of your financial strategy.

How much life insurance should a person have?

By making sure you have enough life insurance, you’re protecting your family and their future. Experts recommend 10 times your annual income as a guideline for life insurance coverage. Another way to calculate a comfortable amount of life insurance is to multiple your income by 10 and add $100,000 per child for college expenses.²

When you think about how much life insurance a person should have it may sound like a lot of money. But if you look at how the money will be used, you can see how your needs add up.

Life insurance benefits can help pay immediate expenses for:

• Uncovered medical costs.
• Funeral expenses.
• Estate settlement costs.
• Outstanding debts.
• Mortgage balances.

By calculating the right amount of life insurance, you can be protected in a life of uncertainty. Life insurance benefits can also be used to help your family cover future financial obligations like everyday living expenses, money for college, income for your spouse during retirement and much more. How much life insurance a person should have depends on the difference between your family’s immediate future needs and their available resources.

Life insurance needs charts

This life insurance needs chart can help you project the monthly income your family may generate after investing a given life insurance benefit over a certain time frame.

This chart shows how long a certain life insurance benefit may cover current monthly expenses.

Insure your love with the right amount of life insurance

Do you have enough life insurance to insure your love? You work hard to provide for your loved ones by making sacrifices each day to enhance their quality of life. There’s almost nothing you wouldn’t do for them. An act of love starts with talking about life insurance, but an even greater act of love is getting life insurance. Life insurance is there to ensure your family’s financial security. Whether you love your spouse, children, parents or grandchildren, life insurance will keep them protected if something happens to you.

Talk about it

Did you know that 59% of people would feel more secure in their relationship if they discussed getting life insurance with their partner?³ Finances play a significant role in relationships. When talking about the future with your spouse, think about discussing life insurance to protect both you and your family for years to come. Building this foundation early on is a great way to protect your finances and your relationship.

Plan and protect

Planning your future with someone can be fun and exciting. Insuring your love with life insurance is the cherry on top. People are attracted to partners who plan, and that includes financial preparedness. 42% describe financial security as one of the most attractive traits to have in a romantic partner.³ When planning out the right amount of life insurance for you and your family, the three main things you want to consider are your immediate, ongoing and future expenses. Along with letting your loved ones maintain their standard of living now, life insurance is there to help ensure their future.

Consider stay-at-home spouses

Don’t assume if you or your spouse is a stay-at-home parent that they don’t need life insurance too. Many people mistakenly think life insurance is only to replace the lost income of a deceased working loved one. However, stay-at-home parents provide many childcare and household services for free. If they passed away, you may suddenly need to pay for this work that was never included in your budget. Some examples include house cleaning, daycare, meal services, transportation, yard work, laundry and many other household duties.

All the little things a stay-at-home parent routinely does for the family adds up quickly if a working parent doesn’t have the time to pick them up. Instead of replacing an income, life insurance would help cover the cost of hiring others to do the work a stay-at-home spouse does for free to keep a family’s home and busy schedule running smoothly.

Ameritas can help

Understanding the amount of life insurance you need is a good starting point. But you’ll also need to think about what type of life insurance is best for your financial strategy. Read this article to learn more about the difference between permanent and term life insurance. You can also learn more about Ameritas offerings for life insurance.

Contact a financial professional to help you protect your loved ones.

The main goal of saving money is to achieve specific long-term goals, such as buying a house, funding your children’s education or retiring comfortably. While it’s easy to understand the need to focus on your savings goals, it’s important to remember that the best financial goals are protected financial goals. If you or your spouse were to pass away, what would happen to your savings?

A focus solely on savings goals without considering financial protection can leave you vulnerable to significant financial losses. By incorporating life insurance into your financial strategy, you can help protect your and your loved one’s financial well-being over the long term. This article will help you understand the role different types of life insurance can play in your financial strategy, and help you decide if permanent life insurance is worth it.

Life insurance is a crucial part of financial protection

Income replacement: Life insurance provides a generally tax-free payment to beneficiaries (the person or entity named to receive the payment) upon your death. This payout can replace lost income, ensuring that loved ones can support their standard of living and meet financial obligations, such as mortgage payments, tuition and daily expenses.

Debt repayment: Life insurance proceeds can be used to settle outstanding debts, such as mortgages, personal loans or credit card balances. This prevents surviving family members from inheriting financial burdens.

Estate planning: Life insurance can help the transfer of wealth to heirs and beneficiaries by providing liquidity to cover estate taxes, probate fees and other expenses associated with estate settlement. This ensures that assets are distributed according to your wishes and can help preserve the family’s financial legacy.

What are your options?

Term life insurance
You may have heard that a term life insurance policy generally costs less. That’s true if you have protection needs for a set period. Term insurance protects your loved ones only for the number of years you choose. Typically, a term is 10 to 30 years. The premium is guaranteed1 not to change for the length of the term.

At the end of a policy term, you have these options if you still need life insurance:

• Renew the policy every year. The insurance company typically guarantees the policy’s annual renewal without requiring a new medical exam or underwriting, regardless of any changes in your health. The premiums for annual renewable term insurance start out lower than those for permanent life insurance policies like whole life or universal life. However, premiums increase each year as you age and the risk of death increases.
• Buy a new policy. Depending on your age, you can also buy a new policy with new exams and underwriting. Your premiums will be higher because you’ll be older. Any changes in your health will also affect your rate or perhaps make you unable to qualify for a new policy.
  
• Convert your policy. Another choice is converting your term policy to a permanent policy during your conversion period, without any exams or underwriting. Depending on the guidelines outlined in your term policy, there may be limitations on when you can convert and the policy you can convert to.

Permanent life insurance
Permanent life insurance is designed to protect for a lifetime. Like its name, it’s permanent. Your coverage doesn’t end like a term policy. It generally has a higher premium than a term policy. Permanent policies also build cash value, which can be accessed if needed.2 They also typically offer an accelerated death benefit rider, which provides you with a portion of your death benefit if you’re diagnosed with a serious illness. These added features may make permanent life insurance worth it.

Check out Permanent Life Insurance Versus Term Life Insurance to learn more about the differences.

Identifying multiple needs

This hypothetical example shows how life insurance can help meet several different goals. Heather is 45 and a single mom. She knows she’s behind in saving for retirement. The only savings she has is about $100,000 in her 401(k) plan and a $10,000 emergency fund in her savings account. Her goal is to continue to contribute the maximum allowed to the 401(k) each year. Heather also understands that she doesn’t have enough life insurance. She’s considering buying a $1 million 30-year-term policy. She feels that would be the least expensive way to get coverage for as long as she needs it. What she saves in insurance she can put towards saving for retirement.

Heather meets with her financial professional to discuss her options. Her financial professional asks her if she’s thought about how far her emergency fund would really stretch if something major were to happen. What would happen to her finances if she were diagnosed with a serious illness? What would she do if her needs changed and she needed life insurance for longer than 30 years?

Heather has never given much thought to the impact an illness could have. She makes a decent living but worries that it may not be enough. And who knows? She might want to move to a new house at some point, and then she’ll have a whole new mortgage to think about. All she knows is that she doesn’t want to become a burden to her daughter later in life.

Different policies support different needs

Once Heather’s daughter is grown, her life insurance need will drop from $1 million to $500,000. Heather decides to buy both a 30-year term and a permanent life insurance policy, both for $500,000. Together, they will provide the desired death benefit while Heather raises her daughter and pays off her mortgage, while keeping the cost of the insurance more affordable. After thirty years, the term policy coverage will end, but she will still have the permanent policy for $500,000.

The cash value of the permanent policy will have grown over those 30 years. She can use it to supplement her retirement needs. Cash value within the policy grows tax-deferred, and she would be able to access that cash value at any time through policy loans. She wouldn’t have to pay taxes on the loans unless the policy lapses.2 The tax treatment of loans is a powerful choice to have at retirement, offsetting what might be lost to taxes from her other retirement savings.

Heather also likes the accelerated death benefit rider that gives her and her daughter more financial protection. Now, if she experiences a serious illness, she can access a part of the death benefit to help pay for her care.

Learn more about options to help you pay for a serious illness in retirement in our blog.

Consider your options

As you build your financial portfolio, it’s important to recognize that buying a combination of different types of policies can help meet your needs. Not only does life insurance provide a valuable death benefit, it can also help you use your assets more efficiently, whether it’s protecting your financial future, transferring wealth or supplementing income. Consult with a financial professional to customize a strategy just right for you.

Whole life insurance is a type of permanent life insurance that provides coverage for the entire lifetime of the insured. One distinctive feature of whole life insurance policies issued by a mutual-based organization like Ameritas is that you will be eligible to receive dividends if declared. Whole life insurance with dividends can play a crucial role in enhancing the policy’s value and providing additional financial benefits to policyholders.

Watch this video to learn how whole life insurance works.

What are whole life insurance dividends?

A whole life insurance dividend is essentially a share of the insurer’s profits that is distributed to whole life insurance policyholders. Dividends are generally declared and paid annually. They’re not guaranteed. Instead, they are contingent on the financial performance of the insurance company and the specific terms outlined in the policy.

How are whole life insurance dividends calculated?

The calculation of dividends involves several factors, and it varies among insurance companies. The key elements influencing the dividend include:

Company performance: The financial success of the insurance company is a primary factor. A well-performing company is more likely to distribute dividends.

Mortality experience: Mortality rate is used by insurance companies to predict the number of deaths within a specific group of people. The actual mortality experience of policyholders influences the calculation. If the number of death claims is lower than expected for the specified period, it positively impacts dividends.

Expenses and investments: The insurer’s operating expenses and investment returns also play a role. Efficient operations and higher investment returns can contribute to larger dividends.

Although dividends are not guaranteed and past performance is not a guarantee of future results, Ameritas has paid dividends consistently, even during periods of declining interest rates. Check out the dividend interest rate factors for our whole life policies since they were introduced.

Benefits of whole life insurance dividends

Whole life insurance with dividends adds additional flexibility and potential growth to policyholders through:

• Premium reduction or offset: Some policyholders choose to use dividends to reduce their premium payments or offset other policy-related expenses. This can be particularly beneficial in managing the cost of maintaining the insurance coverage.
• Paid-up additions: Policyholders have the option to use dividends to purchase additional coverage, known as paid-up additions. This increases the death benefit and cash value of the policy, providing a form of compounding growth.

Understanding how dividends work, their benefits and the factors influencing their calculation is crucial for making informed decisions about insurance coverage. A whole life policy from Ameritas also provides other features to help you reach your financial goals. Talk to a financial professional to help you learn more about whole life insurance and how it fits in with your financial strategy.

In approved states, life insurance is issued by Ameritas Life Insurance Corp. In New York, life insurance is issued by Ameritas Life Insurance Corp. of New York. Policy and riders may vary and may not be available in all states. Optional features and riders may have limitations, restrictions, and additional charges.