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by Indiana Farm Bureau Insurance

What type of life insurance policy do I need?

Woman trying to choose between three roads term life, return of premium life and whole life

What is life insurance


Life insurance can be described as “peace of mind.” Because I have life insurance that will replace my income, I know that if I were to pass away tomorrow, my family could continue to live in the same lifestyle they are accustomed to living.


I rest easy knowing that my children will continue to participate in all their extracurricular after-school activities. I don’t worry that my wife would struggle or have to get a new job because she needs the financial support to take care of our children. I know our children could still attend college or a trade school. I know I could still take care of them financially even though I am no longer with them.


The best part is, if I don’t need to use the death benefit, my life insurance can become income. I have protected my family in the event of my death, but what’s in it for me? There are several ways I can use it:


  • I can supplement my income in retirement with the cash value accumulation that my policy offers. I could receive both a lump sum amount and/or a monthly income stream.
  • In the event of a chronic or terminal illness, I could receive (accelerate) my life insurance death benefit while I am alive. I can be the “beneficiary” of my own policy!
    • That payment can be used for any purpose, such as to pay for medical bills associated with my chronic or terminal illness or maybe use some of the money to enjoy one last family vacation. It’s my money to use however I need.


I was amazed to see and understand how life insurance not only protects my family if I prematurely die, but it also has living benefits if I need to—or want to—use it for my own personal needs. The definition truly is: peace of mind.

An older couple with their dog on the beach looking at peace

Why do I need life insurance?


The reason or the point of life insurance has dramatically changed during the last 10 years. It is no longer designed to be used solely as a death benefit. These policies are designed with living benefits; it now addresses the question, “What’s in it for me if I don’t die prematurely?”


In our country today 63% of adults above the age 65 have two or more chronic conditions.1 Eighty six percent of the nation’s $2.7 trillion annual healthcare expenditures are for people with chronic or mental conditions.2 Seventy five percent of the U.S. healthcare spending is a result of chronic illness care.3

Statistics on the map of the United States of America

I worry about how I am going to afford these types of expenses. I am thankful to learn that I can use my policy to offset these expenses. Plus, if I am diagnosed as terminally ill with a life expectancy of less than 12 months, I could receive almost all of my death benefit while I am alive, allowing me to utilize it however I want or need to.


Another available option is to use the cash accumulation feature in my insurance policy to supplement my retirement income.


Today, life insurance is designed with flexibility. I can use it for myself, and it is there to protect my family. Regardless of when I access or use my policy, I know it will be there to assist me in all the stages of my life, when I need it most.


What kind of life insurance options do I have?


Term Life Insurance


This type of coverage is designed to provide temporary coverage for a specific period of time.


Whole Life Insurance


This policy has protection that remains in force for life, with level premiums and living benefits.

  • Tax-deferred cash value accumulation
  • Chronic illness distribution/protection
  • Terminal illness distribution/protection


Return of Premium Life Insurance


This is a policy that offers protection for either 20 or 30 years, you select how long you need the coverage. We will return your premium back after 20 or 30 years. Or, after year 20 or 30, you will never have to pay another premium and have a reduced, paid-up life insurance policy.

Definitions of the three types of insurance that Indiana Farm Bureau Insurance offers


However, it is not a one size fits all type of decision. I have personally purchased all three. Term insurance is the least expensive and provides the largest amount of my death protection.


I also purchased a 20 year return of premium life insurance policy. I plan on using the cash value from the return of premium to take a three-week vacation to Scotland the first month I retire, a fantastic living benefit of my life insurance policy that I look forward to using.


Another benefit of this life insurance policy is that the cash value amount is guaranteed to be there at the end of 20 years, there is no risk in this policy; as long as I continue to pay my premium, I will vacation in Scotland when I retire.


Last, I purchased a whole life policy so I would have coverage for life. Or, if I become chronically or terminally ill, I have the option of using my death benefit while I am living to pay for medical expenses, or whatever I need or want to use the proceeds for.


My life insurance program provides me with great value. I never realized life insurance offered this type of flexibility and creativity.


How much life insurance do I need?


The question is not how much I need, but how much replacement of income does my family need if I die, and for how long? Or, how much money will I need or want to be set aside in the event I become chronic or terminally ill?


The best way to determine how much coverage my family needs is by using the life insurance calculator. You can also do a simple needs analysis that asks the following questions:


  • What percentage of my income does my family need in the event I unexpectedly die?
  • How many years do they need to replace my income?
  • Should my spouse pay off all the debts we have accumulated?


I am thankful to learn that life insurance offers protection in all these different scenarios. I truly have a newfound peace of mind knowing that regardless of what happens, my life insurance program is there to assist me and my family! Now it’s your turn to talk to an agent and determine what kind of life insurance policy is right for you. 


1. Centers for Disease Control and Prevention. Leading causes of death and numbers of deaths, by sex, race, and Hispanic origin: United States, 1980 and 2014 (Table 19). Health, United States, 2015.



2. National Alliance for Caregiving ( and AARP ( Caregiving in the U.S. 2015 Report.


3. U.S. Department of Health and Human Services. Multiple Chronic Conditions—A Strategic Framework: Optimum Health and Quality of Life for Individuals with Multiple Chronic Conditions. Washington, DC. 2010. Accessed July 26, 2018.


*The information in this article was compiled from a variety of sources and is intended to provide helpful tips only.