4 Things Life Insurance Will Cover (With The Right Advice)

What does life insurance cover?  It may not give you superhero status, but buying life insurance is one of the most selfless things you can do. Why? Because you’re making sure that your family is protected if you’re no longer around to contribute financially.

That seems simple enough. But what does it actually mean? What does life insurance really do for you and your family? Let's talk about the specifics of what life insurance covers.

1. Your children’s expenses until they reach an age of independence

You don’t need us to remind you that your kids are completely dependent on your income—your credit card bills speak for themselves! As a result, kids are the first thing most people think about when buying life insurance. It makes sense that parents want to be sure that their kids will be safe and that their expenses (for example, shelter, food, and clothing) will be covered if anything happened to them. That’s why having kids is usually what prompts people to buy life insurance in the first place.

Good life insurance advice will cover your children’s expenses until they’re financially independent.

2. Your partner’s expenses for as long as they need it (even through retirement)

Most couples save for retirement together. This means both you and your partner put your income towards having the money you need to live a happy retirement (hopefully one that includes a few trips somewhere warm during the winter!).

But if you die, your spouse may have to put most of their monthly earnings towards paying bills, which will leave less money to save for retirement. It’s easy to believe that if you’re no longer alive, your family’s expenses will drop dramatically. But the reality is that many expenses in a marriage don’t decrease by 50% with the loss of one income earner. These include your mortgage payments, property tax, children’s expenses, and much more.

Your life insurance should protect against this loss in retirement savings. In other words, it should ensure that your spouse can still live the retirement they had hoped for if you are no longer around.

3. Any outstanding debts

Your family may drive you crazy sometimes, but this doesn’t mean you want to leave them in a messy situation when you die. That’s why it’s important to remember that leaving your family with outstanding debts (like a mortgage) can be a big burden on them. After all, most couples take on a mortgage believing that both people will help make monthly payments. So if your income vanishes overnight, your family may be forced to move.

Any good life insurance advice will factor in your debts. This will ensure your family can keep making monthly payments even if you aren’t around to contribute anymore.

4. Any unique needs you have (your child’s education costs, elder dependents, etc.)

Good life insurance advice should also consider any unique needs you have. For example, maybe you’re covering the cost of a caregiver for an aging parent. Or maybe you want to support your kid through their undergraduate program in university. If your current income allows you to cover these expenses, your life insurance should too.

Does this seem overwhelming and even a bit scary? We have good news for you.

Our personalized life insurance algorithms take each of these expenses into account when we recommend a life insurance coverage amount that’s right for you.

We’ll be the first to admit that life insurance can be complicated. So when you choose a policy without customized advice that considers your needs carefully, you can run into one of two big problems: you may leave your family with much less than they need (“under protection") or you may find yourself struggling to save for retirement because you spent too much on insurance. That’s why giving you the life insurance advice you need is the core tenant of our philosophy at PolicyMe.

Get a free life insurance checkup today and learn about the coverage you need to protect the ones you love.

And curious about what life insurance doesn't cover? Find out here.

Laura McKay

COO & Co-Founder

About the Author

Laura brings 7 years of experience working in insurance & strategic operations as a management consultant at Oliver Wyman, after experiences at Manulife and Munich Re. In 2017, she launched a successful initiative for the World Economic Forum focused on innovation in insurance, working closely with insurers, tech pioneers, and policy-makers.

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