Enter a search term.
line drawing document and pencil

File a claim

Need to file an insurance claim? We’ll make the process as supportive, simple and swift as possible.

Action Teams

If you want to make an impact in your community but aren't sure where to begin, we're here to help.
Illustration of stairs and arrow pointing upward

Contact support

Can’t find what you’re looking for? Need to discuss a complex question? Let us know—we’re happy to help.
Use the search bar above to find information throughout our website. Or choose a topic you want to learn more about.

The benefits of life insurance: What you need to know

Happy man taking selfie while hiking with family and dog in forest
mixetto/Getty Images

Life insurance can be a planful way to show your dedication to the people you care about—offering them protection and potential for a financial benefit.

Whether you currently have dependents (or may in the future), or you're passionate about leaving a legacy to the organizations and people you love, life insurance can help you reach your financial and life goals. Here's how.

Types of life insurance: Term vs. permanent

For most families, the most essential function of life insurance is to replace lost income when you die—potentially up to 20 years or more. Beyond that need, the right coverage can provide further comfort for your family. The two primary types of life insurance coverage are term and permanent.

1. Term life insurance

If you want to protect loved ones for a certain chapter of your life—like while your children are financially dependent on you—term life insurance can provide affordable coverage for a 10-, 20- or 30-year period.

2. Permanent life insurance

If you don't want your life insurance to expire, then permanent life insurance options like whole life, universal and variable universal life insurance may better suit your goals.

The most common and simplest form of permanent life insurance is whole life insurance, which lasts your lifetime (as long as premiums are paid) and includes both a guaranteed death benefit and cash value component.

The benefits of life insurance

"When you think about your life insurance needs, it starts with self-reflection: Who depends on you? How long do you need to provide for your kids? But also, how do you want to make a difference? Life insurance can support these goals," says Todd Yeiter, director of advisor support Thrivent.

Consider these 8 key advantages of life insurance:

1. Life insurance offers income replacement & support for your loved ones.

While both term life insurance and permanent life insurance offer protection through a guaranteed death benefit, permanent life insurance can also accumulate cash value that you can tap into while you're still living. "We have life insurance for the benefit of each other and our kids—protection is for the survivors," Yeiter explains.

Life insurance can help your loved ones maintain their standard of living and give time and space to process grief instead of getting tied up in financial implications. "Life insurance provides transition time to mourn. That matters." says Yeiter.

Life insurance can provide transition time to mourn. That matters.
Todd Yeiter, director of advisor support at Thrivent

2. It can help you leave a memorable legacy.

Life insurance gives your family the financial support to honor you in the way you'd want. "If something happens to my wife, I want to do something significant—possibly make a sizeable donation to a place or cause that is meaningful in her heart. It's not just about income replacement, it's about institutions important for our daughters and showing her legacy in a meaningful way," says Yeiter.

3. Term insurance offers affordable coverage to fulfill a short-term need.

Whether you want to put your kids through school, pay off a mortgage, or cover other debt if something happens to you, term life insurance offers short-term coverage that's more economical than permanent life options.

For example, if you have minor children or adult children who still need your financial support, you may opt to choose a term insurance option to protect them for as long as they need that assistance.

4. Permanent life insurance can be used like an investment while you're alive.

Permanent life insurance options allow you to potentially grow your money through your cash value component. Some policies even include opportunities to earn annual dividends (though they aren't guaranteed).

5. Life insurance can protect the lives of two people.

If you have a spouse you want to ensure is taken care of down the road, life insurance could help. Married couples can use life insurance to help replace income in retirement due to loss of Social Security or pension benefits when their spouse dies.

Life insurance can also help you care for special needs dependents. In particular, a survivorship life insurance contract's death benefit can be used to continue care for special needs dependents to:

  • Help cover the costs of a replacement caregiver.
  • Supplement income for a dependent to remain in a comfortable living situation.

6. Life insurance can be tax-efficient, for you & your heirs.

Families that anticipate income and estate taxes or need help paying for funeral expenses can look forward to the federal income-tax-free benefit received when the death benefit is paid out.1 Also, you may find that using life insurance as an asset to give to heirs can have more advantages like flexibility, options and guarantees.

Additionally, money within a life insurance policy is also one of the only financial items that won't increase taxes on your Social Security income.

7. Life insurance can serve as a source of cash if you need it.

Depending on your coverage, you can borrow against your cash value or even surrender your coverage for cash if you really need it.2

The cash value of life insurance can be used for things, such as:

  • Providing a retirement income stream.
  • Paying for a child’s education.
  • Making a down payment on a home.
  • A source of emergency funds.

Keep in mind that when you access the cash value of your life insurance contract, you’ll reduce your death benefit. You also may have to pay fees or taxes, so it's best to talk with your financial advisor before you take action.

8. Life insurance can help with business succession.

Whole life insurance can offer some unique living benefits to business owners in addition to the death benefit. For example, an optional waiver of premium rider on whole life insurance contracts can pay premiums if you experience a qualifying disability.

This may best be explained through an example. Let’s say a Thrivent financial advisor served a client, Robert, who purchased a whole life insurance contract with key person coverage to protect his business if he died prematurely.

Unfortunately, several years after buying the life insurance contract, Robert became severely disabled. Thrivent paid the whole life insurance premiums due to that waiver of premium rider, which not only kept the policy in force, but helped build cash value.

When the business came into some financial difficulties, Robert was able to access the cash value of the whole life insurance policy through a loan to keep the business running. When he died, the loan was paid out from the death benefit with the remainder going to his family-run business.

Additionally, if Robert's business hadn't experienced difficulties, he could have structured his policy to provide tax-free income as a supplement to his business earnings should he need it. This way, he would have still had the protection from his policy while also personally benefiting from it.

Illustration of family holding a blue heart

Life insurance: A conversation guide

From vacations to college dreams, creating life plans with loved ones is one of the many joys in life. But when it comes to more sensitive topics, like unexpected death, it can be tempting to avoid the topic. Self-reflection and a family conversation can help you prioritize what's most important to you.

See the guide

Learn more about how life insurance can benefit you

"Ask yourself: Who do I want to be present for? Who's important to me? When you consider these, life insurance can make a significant difference, and you can evaluate the connection between its price and its impact," says Yeiter.

Ready to talk with a financial advisor about your coverage options? Connect with an expert near you.

Under current tax law [IRC Sec. 101(a)(1)], death proceeds are generally excludable from the beneficiary's gross income. However, death proceeds may be subject to state and federal estate and/or inheritance tax.

Loans and surrenders will decrease the death proceeds and the value available to pay insurance costs which may cause the contract to terminate without value. Surrenders may generate an income tax liability and charges may apply. A significant taxable event can occur if a contract terminates with outstanding debt. Contact your tax advisor for further details. Loaned values may accumulate at a lower rate than unloaned values.

Guarantees based on the financial strength and claims paying ability of the insurance company.

Investing involves risk, including the possible loss of principal. The product and summary prospectus contains information on investment objectives, risks, charges and expenses. Read carefully before investing.

Under current tax law, cash value accumulates on an income tax-deferred basis. Thrivent and its financial professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional. Thrivent financial professionals have general knowledge of the Social Security tenets. For complete details on your situation, contact the Social Security Administration.

The primary purpose of life insurance is the death benefit protection. Life insurance contracts have exclusions, limitations and terms under which the benefits may be reduced, or the contract may be discontinued. For costs and complete details of coverage, contact your licensed insurance agent/producer.

If requested, a licensed insurance agent/producer may contact you and financial solutions, including insurance, may be solicited.