How Long Do You Have To Have Life Insurance Before It Pays Out?
Life insurance provides financial protection to your beneficiaries in case of your death. It is intended to replace your income, pay off debts, and cover funeral costs. There are two types of life insurance: term life and permanent life. The death benefit is paid out when the beneficiaries file a claim with the insurance company.
|Type of insurance||Coverage period||Death benefit payout||Premium cost|
|Term life||Set period (e.g., 20 or 30 years)||If the insured dies during the term||Less expensive than permanent life|
|Permanent life||Lifetime||After the insured dies||More expensive than term life due to cash value component|
Term life insurance is often viewed as more straightforward than permanent life insurance. It covers a set period of time and provides a payout only if the insured dies during that time. Permanent life insurance provides lifelong coverage and has a cash value component. The cost of permanent life insurance is higher than term life insurance.
There is no waiting period for life insurance. The length of time the insured person must wait before coverage kicks in is called the elimination period, which is commonly found in disability insurance policies. Life insurance policies may become effective immediately or as soon as the first payment is made.
Before purchasing any life insurance policy, it is recommended to evaluate the options and determine which type of insurance meets your financial needs the best. Factors to consider include marital status, number and age of children, salary expectations, and outstanding debts.
Life insurance can help protect your family from financial hardship after your death. If you are shopping for life insurance, consider SoFi’s partnership with Ladder to offer competitive life insurance policies that are quick to set up and easy to understand. You can apply in just minutes and get an instant decision. As your circumstances change, you can easily change or cancel your policy with no fees and no hassles.
Our carriers beat Colonial Penn, Globe Life, and AARP 96% of the time*
* Based on website quote requests, through 5/31/23.
(Check your rate to see their rates vs. ours)