Life insurance can be one of the best ways to handle financial expenses and plan for their end of life. Many people want to take a policy, but there are several things that they want to know thoroughly. Below are the most asked questions about life insurance.
The answer is that it depends. Many factors are determining how much your life insurance costs. Usually, the insurance companies assess your risk by investigating your age, gender, medical history, alcohol use, and any hazardous hobbies like skydiving. The greater risk means you are more likely to pay higher premiums.
Your life insurance premiums are also determined by other things, including your policy type, policy terms, and the coverage amount. If you need riders or optional customized provisions, you typically have to pay extra cost. Therefore, you should contact the insurance company to get an exact quote.
It depends on the insurer and the coverage you need. Generally, for a conventionally underwritten process, it may take you between 2-8 weeks. The insurance company will issue a no-exam or a final expense policy after your submission in less than two weeks. The delivery time is approximately 7 – 8 days after the policy’s approval.
A permanent insurance policy can be the best option if you are pursuing life-long protection or tax-deferred cash value accumulation. Permanent life insurance policies provide you with a death benefit (the money your beneficiaries will receive when you pass away) and the cash value (a separate savings component you can access). Permanent life insurance is valid until you’re gone on the condition that you do not miss your premium payment.
Yes. You can buy many life insurance policies at once. However, it can be complicated owing to the coverage amount limit that you can own. Therefore, you can consult licensed professionals for their guidance.
Premium payment varies depending on the type of insurance policy you selected. For traditional term life insurance, you have to pay a fixed premium for the initial period of 10, 20, or 30 years. If you need to maintain your policy in force past that period, the premiums will probably increase.
However, regarding universal life insurance policies, you are flexible in premium payment. If you pay more at a young age, you can accumulate the cash value to cover the insurance cost when you become older. If you do not build up that cash value, then the amount paid to keep the policy in effect will ascend with age.
Typically, for a traditional insurance policy, the insurers require you to go through the medical exam. They may disqualify you from life insurance if you have a terminal illness, a severe medical condition, a positive drug test, etc. However, many companies do provide life insurance coverage without medical exam requirements.
Riders are necessary additional benefits that you can add to your insurance policy, and it often requires you to pay an additional premium. In this way, riders amend the terms of life insurance to meet your particular criteria. It’s worth noting that you need to opt for the rider when purchasing the policy because you cannot supplement it later. The most popular riders that life insurance agencies provide are permanent disability and accidental death riders. Other commonly purchased riders include disability income, term conversion, accelerated death benefit, child’s term life, and return of premium (ROP).
You can save your money by opting for term life insurance or both term and permanent insurance. Besides, the premiums you have to pay will increase when you are older or at a higher risk of health conditions. Therefore, it is highly recommended that you purchase a life insurance policy early to benefit from low premiums.
You can get joint or group policies if you need a plan that offers more than one person insurance coverage. For a standard single policy, you should work with the insurance agent to establish what needs doing on the policy cashing. For further information, you can access the Insurance Information Institute at www.iii.org.
Most life policies require you to take medical exams and calculate your premium payment based on the risk level they assign to you. Still, even with a severe health condition, you can have available options such as guaranteed issue life insurance or “No-questions-asked life insurance.” As for the guaranteed issue plans, you have to pay a higher premium and receive a lower death benefit.
A return of a premium rider (ROP) is an optional supplementary feature of term life insurance policies. This feature allows the policyholder to receive a part or all of their premiums if they outlive the policy’s terms. Since the return of premium is optional, you may have to pay the higher insurance premium.
The contestability period is the two years after you have purchased your policy. During this time, the insurance company will review your life insurance coverage. If they find any fraudulent misrepresentation or withholding of information during your application process, they will void the policy according to the Contestable Clause.
Most life insurance policies offer the Accelerated Death Benefit (ADB) – a kind of provision that allows you to get a portion of your life insurance death benefit to use while they are still living. Generally, if you have a terminal illness, or depending on the policy, have a life span of 6 months to 2 years, you can receive part of your life insurance policy’s value. If you suffer from certain disabling conditions, you can still qualify for ADB irrespective of your life expectancy. Though policy guidelines may vary, you can usually take out between 50 and 80% of the policy value.
Typically, your insurance policy will stay in effect when you pay your premiums within the 30- or 31-day grace period. Your failure of premium payment will result in your policy lapse, depending on each kind of policy. As with a permanent life insurance policy, your cash value, if available, may be used to cover your premium payments.
When you have become disabled and cannot pay your premiums, you do not need to pay during your disability period as long as you have added a waiver of the premium provision – a kind of rider to your policy. For a universal life insurance policy, policyholders are allowed to be flexible in premium payments, which may be helpful when your cash flow is unstable.