4 surprising things to know about life insurance

Life insurance provides your loved ones with financial protection should you pass on. If you die during the coverage term, they'll receive a lump sum cash payment they can use to cover unpaid debts, medical bills, funeral expenses and more.

Some policies have additional benefits, too — and can even be a helpful financial safety net if you need one down the line. 

If you're in the market for life insurance - or want to boost the protection you already have - then speak to a life insurance expert now who can help you get started. 

4 surprising things to know about life insurance

Here are three things you should know as you shop for a policy.

1. Taxes don't have to be paid on the benefit amount 

All life insurance policies come with a death benefit — a cash payment that your beneficiaries receive if you pass away. This in itself can be helpful to the loved ones you leave behind, but even better? It's generally not taxable.

The Internal Revenue Service does not require beneficiaries to report life insurance proceeds as gross income. This can help your loved ones avoid a costly tax increase in the year you pass — something that may be vital to their financial survival.

Keep in mind: There are some exceptions to this rule. If the policy is transferred to someone or they receive interest on it, they may owe taxes. Talk to a tax advisor for guidance specific to your situation.

2. Some policies let you take cash out 

A number of life insurance types — like whole life insurance and universal life insurance — have a cash value component, which you can take withdrawals from when needed. This can be helpful if you have sudden expenses you can't cover, like medical bills, unexpected home repairs or a car accident. 

Many policies also allow for loans against them, which can potentially give you access to even more money in a pinch. You may not even need to repay the loan (though going this route would reduce your beneficiaries' death benefits). 

This is why you should speak with a life insurance expert now. They can answer any questions you may have and help you get started with a policy that works best for you. 

3. A medical exam isn't always needed 

Despite popular belief, not all life insurance policies require medical exams. Types of policies that may not require an exam include simplified issue insurance and guaranteed issue insurance. Group life insurance — offered through your employer — also may not require it. 

In some cases, life insurance providers may only require a short medical questionnaire rather than a full, professional evaluation. 

Both of these options can be helpful if you want a quick, hassle-free policy-buying process or if you have a pre-existing health condition, work in a risky profession or are a smoker, as these can make it difficult to qualify for traditional policies. 

4. You may already have it

Did you know you may already have life insurance? Many employers actually offer a baseline life insurance policy as a benefit to employees (along with medical, dental and vision plans). The amount of coverage employers provide is relative (often one to two times the employees' annual salary) and it may not be enough (you may need to supplement it on your own). Still, any life insurance protection is better than none.

If you're not sure if your employer provides life insurance, or how much, reach out to your Human Resources (HR) department. They can help you determine if your coverage is sufficient or if you need to increase it privately. A life insurance expert can also help guide you toward the right plan. 

One more surprising fact…

There are many kinds of life insurance policies, including variable life insurance, term life insurance and whole life insurance, and each has its own drawbacks and advantages. With some policies, your monthly payments, death payout or both may be flexible. Once your cash value account grows enough, you may even be able to use it to cover your premiums entirely.

If any of these (or the above perks) sound like something you could benefit from, it might help to consult an insurance agent or financial advisor for guidance. They can determine the best type of life insurance protection for your needs, as well as help you compare insurance companies.

Use the table below to review your options or speak with an insurance agent now to get started.