What is life insurance and how does it work?

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Assurance IQ, LLC a wholly-owned subsidiary of Prudential Financial, Inc. ("Prudential") matches buyers with products such as life and health insurance and auto insurance, enabling them to make purchases online or through an agent. Neither Prudential Financial, Inc. nor Assurance IQ issues, underwrites, or administers health plans or health insurance policies.

Life Insurance and Annuities are issued by The Prudential Insurance Company of America, Pruco Life Insurance Company (in New York, by Pruco Life Insurance Company of New Jersey), located in Newark, NJ (main office). Variable annuities are distributed by Prudential Annuities Distributors, Inc. (PAD), Shelton, CT. All are Prudential Financial Inc. (PFI) companies, and each is solely responsible for its own financial condition and contractual obligations. Prudential Retirement Strategies is a business of Prudential Financial, Inc.

Prudential Annuities Life Assurance Corporation (to be renamed Fortitude Life Insurance & Annuity Company) (“PALAC”), Shelton, CT (main office) was acquired on April 1, 2022 by Fortitude Group Holdings, LLC, the parent company of Bermuda’s largest multi-line reinsurer (“Fortitude Re”). As a result of the acquisition by Fortitude Re, PALAC is not affiliated with PFI or any of its subsidiaries. A Prudential entity will continue to service and administer all PALAC contracts. PALAC variable annuities are distributed by PAD, Shelton, CT. PAD is wholly owned by PFI; PALAC is wholly owned by Fortitude Re; each is solely responsible for its own financial condition and contractual obligations.

PALAC is not licensed to do business in New York, effective December 31, 2015. This will have no impact on existing annuity contracts sold through PALAC.

Group Insurance coverages are issued by The Prudential Insurance Company of America, a Prudential Financial company, Newark, NJ

LINK by Prudential is an umbrella marketing name for various subsidiaries of The Prudential Insurance Company of America. Investment advisory products and services of LINK by Prudential are made available through Pruco Securities, LLC, (sometimes referred to as “Pruco”) doing business as Prudential Financial Planning Services, pursuant to separate agreement. Prudential LINK and LINK by Prudential occasionally may be referred to as LINK.

Where LINK by Prudential is made available in connection with certain Financial Wellness products, access is made available through Prudential Workplace Solutions Group Services (“PWSGS”). PWSGS provides access to a number of Financial Wellness products, services, seminars and tools offered by PWSGS, its affiliates or third parties. PWSGS is a subsidiary of Prudential PWSGS is not a licensed insurance company, does not provide insurance products or services and does not provide financial, investment or other advice. Individuals should consult appropriate professionals when making financial, investment and tax decisions.

Prudential LINK financial representatives currently offer a more limited range of insurance and annuity products (“insurance products”) compared to the range of insurance products offered through other Prudential distribution channels.

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This web page is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation about managing or investing your retirement savings. Clients seeking information regarding their particular investment needs should contact a financial professional. Prudential Financial, its affiliates, and their financial professionals do not render tax or legal advice. Please consult with your tax and legal advisors regarding your personal circumstances. In providing this information, neither Prudential nor any of its affiliates or financial professionals is acting as your ERISA fiduciary.

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Securities and Insurance Products:

Certain securities products and services are offered through Pruco Securities, LLC and Prudential Investment Management Services, LLC, both members SIPC Opens in a new window and located in Newark, NJ, or Prudential Annuities Distributors, Inc., located in Shelton, CT. See Statement of Financial Condition PDF Opens in a new window for Prudential Investment Management Services, LLC.
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Not Insured by FDIC or any Federal Government Agency | May Lose Value | Not a Deposit of or Guaranteed by the Bank or any Bank Affiliate.
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Projections generated regarding likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results derived from various “what if” scenarios for your financial life may not reflect the actual costs or amounts ultimately needed to fund specific life events. Prudential and its affiliates are not liable for use of the LINK by Prudential experience. Learn more about our Methodology Opens in a new window.

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In exchange for regular payments (your premium), your insurer will pay your loved ones (your beneficiaries) a lump sum of money (a death benefit) while covered by the policy. The amount of the lump sum is determined by the size of your insurance policy (your coverage).

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There are two main categories of life insurance – term and permanent. Term life insurance, the more affordable option, provides coverage for a set period. If you should happen to pass away during this time, your insurer will pay a death benefit to your beneficiaries. Permanent life insurance, while generally more expensive, provides coverage for up to your lifetime (as long as premiums are paid) and typically offers the ability to build cash value.

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A general rule of thumb is that life insurance coverage should replace 6 to 10 times your gross annual salary. However, in addition to income replacement, there are a number of factors to consider when deciding the right amount of coverage for your circumstances. It’s important to also take stock of your current and future financial responsibilities, including your mortgage balance and any additional debts you may owe (e.g., credit cards, car loans, student loans, etc.), your children’s education expenses, and your family’s day-to-day living expenses. These are all financial obligations that would fall to your loved ones in your absence – providing adequate coverage helps ensure they have resources for these after you’re gone.

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The cost of life insurance varies depending on several factors, including the type of policy you choose, the amount of the death benefit, and the riders you include. Your age and overall health may also be reviewed as a part of the underwriting process with certain policies requiring you to complete a medical exam.

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Once you have a solid understanding of life insurance basics, our Six Ways to Use the Power of Life Insurance article is a great resource to learn more about the lesser-known benefits of life insurance.

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A Financial Professional can talk you through your options and help you select the right policy for your needs.

Or, if you’re ready to buy, you can skip the talking and get a term life insurance quote online now.

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© 2021 Prudential Financial, Inc. and its related entities. Our policies contain exclusions, limitations, reductions in benefits, and terms for keeping them in force. A financial professional can provide you with costs and complete details.

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What is Life Insurance?

How does life insurance work?

What are the various types of life insurance?

How much coverage do you need?

How much does life insurance cost?

What are the other uses of life insurance?

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