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What Is Life Insurance?

Kaycie Tyll

Part I: The What

What is it?

The purpose of all life insurance is to help provide a secure financial future for your family after you’ve passed away.

Many people determine the amount of coverage that’s appropriate for them based on the needs approach. This approach estimates how much money your family would need to help replace lost income, make debt payments (i.e. credit card or mortgage), and take care of other ongoing expenses for a set amount of time after you’re gone.

What kinds of insurance policies provide coverage for your life?

There are a number of types of insurance policies that provide a death benefit.

Accidental Death Insurance

When you’re 25 to 44, the single greatest risk to your life is accidental death1. Accidental death insurance is built specifically for that. It tends to be affordable and, because it is guaranteed issue and the insurance provider doesn’t need to take your health into consideration, it can be purchased extremely quickly.

Fabric Instant is insurance for accidental death. Plans start at $6.00* per month. Covered in under 2 minutes.

Term Life Insurance

Term life insurance provides a death benefit that covers both accidental death and death caused by illnesses. It is often medically underwritten and requires a physical exam. Term life insurance tends to get more expensive to purchase as you age.

Fabric Premium is a 20-year term life insurance policy that you can apply to upgrade to from Fabric Instant. It replaces your Fabric Instant policy and covers you for death caused by accidents and illnesses.

Whole Life Insurance

Whole life insurance, also called permanent life insurance, is a product that offers coverage for the entire life of the policyholder. Its premiums include a mix of insurance and investment components, the latter of which builds accumulated cash value that can be borrowed against or withdrawn before you pass away.

Whole life insurance policies are more expensive and complex as compared to term life insurance due to the fact that they provide lifetime protection, as both the death benefit and living benefit. Certain fees and expenses will reduce the cash value, which can, in turn, affect the benefit amounts.

You may convert Fabric Premium to whole life insurance if you wish.

Part II: The How

How does it work?

A life insurance policy is an agreement between you (the “policyholder”) and the insurance company (the “insurance provider”), that says that if a specific person passes away (the “insured”), while the monthly payments (the “premiums”) are paid-up, they will make a lump sum payment (the “death benefit” also referred to as the “coverage amount”) to the person or persons of your choosing (the “beneficiary”).

How much does it cost?

Fabric Instant starts at $6/mo for $100,000 in coverage, $15/mo for $250,000 in coverage and $30/mo for $500,000 in coverage*.

Once we know a few details about you (including your age and whether or not you use tobacco) we can generate your quote for Fabric Premium. Once you’ve completed the required health exam and the underwriters evaluate your results and determine your rating classification, your final pricing will be determined.

Depending on your age, gender, and specific health details, upgrading to Fabric Premium often costs just a few dollars more than Fabric Instant. In some cases, upgrading can actually save you money.

What if I buy a policy today and pass away tomorrow - how much of the coverage amount will be paid?

100%. So long as the event leading to your mortality is covered by your policy, and the premiums are paid. End of story.

Part III: The Who

Who might want to have it?

Most people who’ve recently started their family purchase life insurance for one of two reasons.

The first reason, and the main purpose of life insurance, is the death benefit. It’s probably safe to say that we’ve all thought about what would happen to our families if the primary wage-earner were to unexpectedly pass away, whether that be us or our partner.

When it comes to purchasing life insurance for survivor protection, it shouldn’t just be about the lost income of the “bread-winner”; it’s also worth considering how much child care would cost if the non-earning spouse, who takes on the full-time responsibility of staying home with the children, were to pass away.

Every parent wants to know that even if they pass away, the people depending on them financially will be taken care of.

The second reason is because the purchase of life insurance creates an immediate estate, so to speak.

Estate creation can be especially important for young families that are just getting started and don’t have much when it comes to assets that will be left to their loved ones.

With life insurance though, you can create an instant estate for yourself in the amount of your policy’s death benefit.

With that being said, the policy needs to remain active and in force and the cause of death needs to be covered by the specific policy in order for your beneficiary to receive the benefit.

Which type of policy and how much coverage should I buy?

If you’re unsure how much coverage you should have, our life insurance calculator can come in handy.

When you compare life insurance policies, spend some time thinking through the financial needs of your family and how they’ll be impacted if you or your spouse were to suddenly pass away.

A solid rule to live by is to read, and understand, all of the information that’s available to you on any type of insurance policy before pulling the trigger and buying it.

Ask questions! If you’re unsure where to start, here are some questions to help get the ball rolling:

  • How long should I have insurance coverage for?

  • Would it make sense to have lifetime coverage?

  • Do I need a policy with living benefits?

  • Do I need a medical exam?

  • Are there any limitations and/or exclusions? If so, what are they?

  • What happens if I miss a payment?

To get answers to these questions, check out our FAQs or send us a support message 😊

Are you ready to see how easy it can be?

Fabric Instant offers accidental death insurance that takes about 2 minutes from start to covered.

Get your pricing now.

1 CDC, National Vital Statistics Report, Volume 64, Number 2; February 16, 2016, Table 9.

*prices may vary by state

This material is designed to provide general information on the subjects covered. It is not, however, intended to provide specific advice or to serve as the basis for any purchasing decisions.

Fabric Insurance Agency, LLC offers a mobile experience for people on-the-go who want an easy and fast way to purchase life insurance.

Kaycie Tyll

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© 2018 Fabric Insurance Agency, LLC

Fabric Instant is an Accidental Death Insurance Policy (Form VL-ADH1 with state variations where applicable) and Fabric Premium is a Term Life Insurance Policy (Form ICC16-VLT and CMP 0501 with state variations where applicable). Policies are issued by Vantis Life Insurance Company. (Vantis Life), Windsor, CT (all states except NY), and by Vantis Life Insurance Company of New York, Brewster, NY (NY only). Coverage may not be available in all states. Issuance of coverage for Fabric Premium is subject to underwriting review and approval. Please see a copy of the policy for the full terms, conditions and exclusions. Policy obligations are the sole responsibility of Vantis Life.

Fabric Insurance Agency, LLC (FIA) is an insurance agency licensed to sell life, accident, and health insurance products. FIA will receive compensation from Vantis Life for such sales. The NAIC Company Code for Vantis Life is 68632. See the Terms of Use for additional information regarding FIA.‬‬