Life insurance is a contract, often called a “policy”, between you and an insurance company to provide money to a person you designate, in the event that you die during the time the contract is in force. In essence, during your lifetime you pay money, known as the insurance “premium”, to the insurance company. It promises to pay money to the persons you name, the “beneficiaries”, at your death. Some types of life insurance also give the policy owner the right to “borrow” a portion of the “cash value” within a policy, or to receive an “accelerated death benefit” if you become terminally ill or require confinement in a long term care facility.
Who needs life insurance?
Life insurance is a product of love. If you care for someone’s financial well-being after you, you need life insurance. It will replace income, pay final expenses, pay off debts, payoff medical bills, help pay off mortgage, just to mention a few.
Wouldn’t my group insurance from work be enough?
Maybe, maybe not. Group life insurance through work is good for only as long as you are working. Mostly, it is not enough to cover the level of life insurance you actually need.
Sometimes, you will have an option to sign up for a life insurance policy that you can carry with you. The premiums are deducted out of your salary. This is not the best way to purchase life insurance. Remember, in this case, your human resource department has allowed one insurance company to sell you its product. By signing up with that you take away from yourself the advantage of shopping the market that a service like ours offers.
Who regulates insurance business? How do I find the address and phone number for my state insurance department?
Insurance products are regulated by the respective state department of insurance.
The following link will give you the option to click on any state and reach it’s Department of Insurance: http://www.naic.org/state_web_map.htm.
What does it mean to be the owner of a life insurance policy? Who is the owner of my policy?
Usually, the insured is also the owner unless the policy has been specifically set-up to have a different owner. The owner is the person who pays the premiums and has the authority to make allowed changes during the course of the policy.
What should I do if I have problems in getting coverage?
If you can't get individual insurance, consider these approaches:
(1) See if you are automatically eligible for group life coverage, through your employer or any organization you belong to. This type of coverage is sometimes issued without any individual underwriting; the insurance company relies on the general experience of the whole group. Very often, group plans permit people to buy up to a fixed amount, without any evidence of insurability. If so, buy as much as you need but still can afford.
(2) Consider "cash value life insurance" such as Whole Life or Universal Life. Life companies often are more liberal in terms of underwriting on cash value life insurance than on pure term life insurance.
(3) See if you are eligible for any other form of life insurance that does not require underwriting. Such policies generally are awful, the amounts available are usually small, the premiums usually are very high, but as there may be a 2 year waiting period before your beneficiaries would be able to collect anything more than the premium you paid in, it may make sense for those who can't get anything else.
(4) Consider buying Accidental Death and Dismemberment Insurance (AD&D). AD&D covers only deaths that result from accidents, but that may be better than nothing.
(5) Consider certain types of credit card insurance -- the cost is normally outrageously high, but it may be the only alternative.
(6) Consider going without life insurance. Save the money you would have paid as premium, and build a nest egg for your survivors.
(7) Do whatever you possibly can do to address the health concerns that caused you not to be able to get insurance. That may involve weight loss, exercise, diet, smoking cessation, etc.
(8) Consider reapplying after you have addressed the health concerns or time has passed. Someone who may not have been insurable at age 40, perhaps because of a recent cancer diagnosis, may become insurable at 45 if there is no recurrence.
How much life insurance do I need?
Use our financial calculator to determine how much may be enough. In general, depending upon your age and need, 20 to 30 times your annual income is recommended.
Will I have to go through a medical exam to buy life insurance?
It depends upon what kind of plan you are buying. Most life insurance plans are fully underwritten by the life insurance carrier. These will mandate that you go through a small free medical exam. Others will ask you questions and approve you without an exam, mainly based on your answers and the information the company may get from Medical Insurance Bureau (MIB). Keep in mind that fully underwritten plans are less expensive.
Do I need to give personal information about my medical condition and finances to get insurance?
Absolutely. If you do not want to give your medical and financial information, life insurance companies do not want to deal with you. These companies need to first determine if you qualify, and then make sure that you need what you are looking for. It is done to make sure that no inappropriately large amount of life insurance is being purchased on the life of someone whose death may not create that level of financial hardship for the loved ones. Corrupted minds and greed is kept under check.
What about companies that advertise no physical exam?
More and more companies are coming up with no exam life insurance plans. These are absolutely perfect life insurance plans mostly purchased online. Premiums are usually higher than fully-underwritten plans. But the products are generally issued instantly.
What happens to the medical information from my application?
It is properly used only for underwriting insurance. Once your policy is approved or disapproved, you can order a copy of your medical exam results through the insurance company.
How do I get a copy of my MIB report?
Ask your insurance company contact or go to the MIB web page at mib.com; or you can contact the MIB at:
P.O. Box 105
Boston, MA 02112
Phone number 617-426-3660
Will a life insurance policy affect my eligibility for medicaid benefits?
Cash value life insurance is considered to be an asset under federal guidelines for Medicaid eligibility. But if you have a term life insurance plan, you have nothing to worry about. Different states may have different guidelines. Please check with your state.
Can I buy life insurance over the internet or by telephone?
Telephone and Internet has changed our world forever. Most of our business at insuranceinminutes.com is done over these two. A stranger agent sitting 100s or 1000s of miles away, may turn out to be the best advisor you ever talked to regarding your insurance needs.
I see ads for life insurance at much lower rates than the policy I am presently paying for. Should I discontinue my current policy and buy a new lower cost policy?
In general, do not discontinue any life insurance plan you have before you have another to replace it. Advertised rates are usually the best rates under the best health and other conditions. You may or may not qualify.
You also need to compare the benefits and features of the advertised rates.
Also, keep in mind that you are older than when you bought the original policy, and your health status may have changed. This could be an important factor because the new policy will have a new contestable period, usually two years.
Comparing term life insurance plans for rates may work. But cash value policies are hard to compare, especially if a substantial amount of time has passed.
How do I get the “best deal” on life insurance to cover my insurance needs?
A best deal for you may not be best for your neighbor. The only way to get the best is to spend some time with an experienced independent agent, who by asking you questions can go over your needs and wants and come up with a plan to suit your budget and makes sure that it works in your best interest.
Who can take out a policy on my life?
Only a person with insurable interest can buy a life insurance policy on you.
Generally, these people include your immediate family or your business partners.
However, it cannot be done without your agreement. Parents have the ability take out life insurance policy on their children who are below the age of 18.
Who can my beneficiary?
Anyone with an insurable interest can be your beneficiary. Your immediate family, your business partner, fiancé or domestic partner, your trust, your mortgage company and so on. You can also have multiple primary and secondary beneficiaries.
What is the effect of social security payments on a beneficiary?
What is the effect on a beneficiary’s federal income tax liability?
Proceeds of a life insurance policy generally go income tax free to the beneficiary.
Should a funeral home be made the beneficiary of a burial life/final expense life insurance plan?
Never. Beneficiaries should be the family members responsible for burial. Instead of making a third party beneficiary make sure you also have a contingent beneficiary on the policy.
Which policy should I buy? How can I hope to get the right plan for my needs?
This is where an in depth discussion with your life insurance agent or financial planner will be useful. A product should be chosen based on your need and not what is fashionable to buy. Do not take as word of God any suggestion from a consultant, however well-known who favors one product over the other without considering your individual circumstances.
How do I make sure that my family will be able to pay off the house if I die?
The person you want to leave the house to should be the beneficiary of your life insurance policy. If you do not think that the proceeds from your life insurance policy will be used wisely, in that case you can select your mortgage company as one of the beneficiaries. This is done by filling up a form called, Collateral Assignment. As a result, the mortgage company gets only what is left over of the mortgage. The rest goes to your other beneficiaries.
What is underwriting?
The process of underwriting identifies and calculates the risk of loss from policyholders, establishes who receives a policy, determines the appropriate premium, and writes policies that cover this risk. A number of factors can influence an Underwriter’s decision and impact your premium. These include and are not limited to:
3. Current condition of health
4. Past history of health
5. Whether you smoke, use excessive alcohol, or take drugs
6. Family history of heart disease, cancer and diabetes
7. Potentially risky activities, including travel, or risk level at employment
8. Misdemeanor or felony
9. Pending bankruptcy
10.Driving record of the past 1-3 years
In order to determine if an application should be approved, Underwriters consider information from various sources including medical reports, reports from data vendors, and actuarial studies. In the end, an appropriate rating class and premium is established.
Can I change my mind and get a refund?
Most states have a requirement that a life insurance policyholder can return a newly issued policy within a specified period and receive a complete refund of any premiums paid. This “free look” period of between 10-30 days, depending upon which state you are in, allows the new policyholder an opportunity to review the policy in detail.
Will moving from one state to another or one country to another affect my existing life insurance policy?
Moving to another state does not affect your existing life insurance. However, if you move to another country, especially if it is one where there is civil unrest or warlike activities, then you should check to see if your life insurance policy has any provisions that affect your coverage under those circumstances.
Will a divorce or break up with my partner affect my life insurance policy?
It does not impact your life insurance policy. But you must change your beneficiary, reconsider relevance of the current policy and calculate the need of a new policy, if there is any.
Is it necessary to be a US citizen or Permanent resident to qualify for life insurance?
Not really. Certain temporary visa holders such as H1-B, H-4, L-1A, L-1B, K-3 etc. do qualify to receive this benefit. But not all insurance companies accept them. Those which do mostly charge the premium at standard risk.
Is there any Broker’s fee involved?
No. Life insurance companies do not allow brokers or individual agents to charge a fee for the service. This is also a mandated regulation by the Office of the Commissioner of Insurance in respective states. They are compensated by commissions. Therefore dealing with an honest person is more important. Someone who will not promote a company based on the level of commissions he or she makes.
LIFE INSURANCE QUOTES
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PLEASE NOTE: By law, agents and brokers offering life insurance products cannot charge fee for service from a client. Therefore, your premium is exactly what an insurance company quotes.