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10 things you never knew about life insurance

April 11, 2022• 4 min read

What we'll cover

  • The cost of life insurance

  • Ways you can buy life insurance

  • When to secure life insurance

Life insurance might not sound like the most exciting topic, but it’s an important one. Life insurance is valuable protection for your family. Its important to understand the ins and outs of this important coverage and what it can do to help provide security for your family today and for the years ahead.

However, many people still don’t have a firm grasp on what life insurance is and why they should have it. Start stepping up your own knowledge with these essential life insurance facts.

Most people have life insurance.

If you already have life insurance, you’re in good company. In 2020, 54% of all people in the United States were covered by some type of life insurance.

Life insurance is (probably) cheaper than you think.

If you think you can’t afford life insurance, that’s likely not the case. One of the many myths that persist about life insurance is the belief that it’s cost-prohibitive. In fact, half of Americans overestimate the cost of life insurance (at more than three times the actual cost!). In reality, policies average around $40 to $55 per month.

You can buy life insurance online now.

Many aspects of our lives are digital now, and that goes for life insurance too. Between 2011 to 2020 the percentage of people who prefer to buy life insurance online grew from 17%  to 29%.

Life insurance is mostly tax-free.

You don’t have to worry about your partner, children or other beneficiaries being taxed on a life insurance payout. The proceeds a beneficiary receives from the death benefit of a life insurance policy are not included in gross income and do not have to be reported to the IRS. The exception is interest received, which is taxable and should be reported.

Life insurance companies pay out hundreds of billions of dollars in benefits each year.

In 2020, life insurance benefits and claims totaled $747.4 billion, which includes life insurance death benefits, annuity benefits, disability benefits and other payouts.

Life insurance gets more expensive as you get older.

Some people think they don’t need life insurance because they’re young and healthy, but that’s exactly why they should get covered now. The younger you are, the lower your premiums will be. For instance, if you’re a healthy female, non-smoker, 5’6”, 130 lbs seeking $1,000,000 of coverage for 20 years, a term life insurance policy through Ladder will cost $34.50 per month at age 25. By age 45, that premium increases 166% to $91.80 per month..

People wish they got life insurance sooner.

When people do buy life insurance, their main regret is not getting it sooner. Nearly 4 in 10 insured people wish they had purchased their policies at a younger age, locking in a lower premium.

Life insurance has a gender gap.

Only 47% of women have life insurance, compared to 58% of men. As of 2019, two-thirds of mothers were either sole breadwinners or co-breadwinners for their families. Life insurance is a smart way for women to help provide for their loved ones’ security.

Covering funeral expenses is the most popular reason people buy life insurance.

Life insurance is an incredibly personal topic and people buy it for all kinds of reasons, but the top reasons are

  • Covering burial and final expenses (83%)

  • Helping to replace wages of the insured (68%)

  • Transferring wealth or leaving an inheritance (63%)

Most people are not confident in their knowledge about life insurance.

Only 31% of Americans say they are very or extremely knowledgeable about life insurance. Information is power, because consumers with a higher understanding of insurance are 30% more likely to have adequate coverage.

Help make an informed decision about life insurance.

Although it might feel overwhelming, the evidence is clear — life insurance is a smart choice. And now that you have the facts, you can be confident in your decision to purchase life insurance.

Get off to a strong start with Ally. We’ve teamed up with  Ladder  to offer innovative term life insurance with an easy online application process.

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