Life insurance provides a death benefit to beneficiaries after the insured person dies. This type of coverage helps relieve your loved ones of some of the financial difficulties that may occur after your death. If you support anyone financially, have a business partner, or have jointly held debt with someone, life insurance may serve as an essential part of your financial plan. 

At Nobles Insurance Agency in Clayton, North Carolina, we work hard to ensure that our clients have the life insurance coverage they need to provide for their loved ones. 

How Does Life Insurance Work? 

A life insurance policy is a contract between the policyholder and an insurance company. The policyholder pays a premium with the understanding that after the insured person's death, the beneficiaries will receive a set amount of money. 

So long as the policy is in force when the insured person dies, beneficiaries can submit a claim to the insurance company to receive a lump sum payment, which is the face value of the policy.  

What Types of Life Insurance Are Available? 

There are two main categories of life insurance; permanent life and term life. 

Term Life Insurance 

A term life insurance policy provides a death benefit in exchange for premium payments. It's the simplest and least expensive life insurance option. 

The policy owner decides how long they want coverage with a term policy. Term policies usually last five, 10, 15, 20, 25, or 30 years. Longer terms generally come with higher premiums. The beneficiaries receive the death benefit if the insured person dies while the policy is in force. 

Some term policies are convertible, which means that the policy owner can change the policy to a permanent life insurance policy in exchange for a higher premium, and the insured person doesn't have to go through a medical exam. 

Permanent Life Insurance 

A permanent life insurance policy has two components: the death benefit provides a payout to beneficiaries when the insured person dies; and, the savings component builds value over time. Eventually, the policyholder may be able to take out a loan against the policy's cash value. The policyholder may also be able to receive the cash value in one lump sum payment if they no longer need the death benefit. 

Permanent life insurance never expires. As long as the policy owner makes the premium payments, beneficiaries receive a payout upon the insured person's death, no longer how long that person lives. 

There are many types of whole life insurance, which may be helpful in specific situations. 

• Whole or ordinary life insurance: This is a common type of life insurance that provides a death benefit with a savings account. Premiums typically stay the same, and the savings element grows based on dividends paid by the insurance company.

• Universal or adjustable life insurance: This type of life insurance policy is more flexible than a whole life policy, with the option to increase the death benefit with a medical examination. The cash value portion of a universal or adjustable life insurance policy earns the money market interest rate. Policy owners may choose to alter premium payments if there's enough money in the savings portion of the policy to cover the premiums.

• Variable life insurance: The policy owner can invest the savings portion of this type of life insurance in money market mutual funds, stocks, and bonds. The cash value and death benefit may decrease if the investments lose money. Some variable life insurance policies come with a guarantee that the death benefit will not decrease, even if the investments inside the account lose value.

• Variable-universal life insurance: This policy combines the features of universal life insurance and variable life insurance. Policy owners may be able to adjust their premiums and death benefits. They can also control the investments inside the savings portion of the policy.

Get a Life Insurance Quote Today 

Call the Nobles Insurance Agency at 919-833-3803 today to get the life insurance coverage you need. Our agents are ready to help you decide which type of life insurance may best meet your needs. They'll walk you through your options, talk with you about life insurance premiums and help you get a custom quote.