Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Brandon Frady
Licensed Insurance Agent
Brandon Frady has been a licensed insurance agent and insurance office manager since 2018. He has experience in ventures from retail to finance, working positions from cashier to management, but it wasn’t until Brandon started working in the insurance industry that he truly felt at home in his career. In his day-to-day interactions, he aims to live out his business philosophy in how he treats hi.
Written by Brandon FradyLicensed Insurance Agent
Scott W. Johnson
Licensed Insurance Agent
Scott W Johnson is an independent insurance agent in California. Principal Broker and founder of Marindependent Insurance Services, Scott brings over 25 years of experience to his clients. His Five President’s Council awards prove he uses all he learned at Avocet, Sprint Nextel, and Farmers Insurance to the benefit of his clients. Scott quickly grasped the unique insurance requirements of his.
Reviewed by Scott W. JohnsonLicensed Insurance Agent
UPDATED: Nov 8, 2023
Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance provider and cannot guarantee quotes from any single provider. Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.
UPDATED: Nov 8, 2023
Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance provider and cannot guarantee quotes from any single provider. Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Are you confused about life insurance and want the answers to life insurance frequently asked questions? We have answered the most commonly asked questions about life insurance, from questions about the types of life insurance to how to save on life insurance.
If you are interested in purchasing life insurance after having your questions answered, check out our free quote comparison tool that will help you find the best deal on life insurance.
Not necessarily. If you have no children or dependents whom you support financially, you might not need a life insurance policy after all. Life insurance aims to provide a solution for those who seek income replacement, mortgage protection, estate planning, leaving a legacy, or burial expenses. However, if someone you love is dependent on you financially, you need life insurance.
Buying a term life or a combination of term and permanent insurance may help you pay a lower premium. Buying a policy early in life is also a good way to ensure a lower premium.
The older you are, the higher the premiums, and the more risk you have of developing a health condition that could increase your premium even more or disqualify you from getting coverage at all. You can read more about saving on life insurance here.
Premium rates are typically based on factors such as age, gender, height, weight, health status (including whether or not you use tobacco), and if you participate in high-risk activities or occupations.
Permanent policies are typically the best option if you are looking for life-long protection, or an option to accumulate a tax-deferred cash value. A portion of the premium of a permanent policy is used to build up a cash value. The cash value can be used in several different ways, including allowing you to take out a loan against the cash value, or paying your premium after your policy is fully paid up.
If you already have a policy, it will usually have a lower premium rate than a new policy you would buy. If you’re buying a permanent policy, the cash value will also be smaller for several years. Keeping all these factors in mind, it might be worth considering a new policy if you have any significant changes in your life circumstances, such as if you:
“Fully paid up” means that you have paid enough premiums to cover the cost of the policy for the rest of your life, and the company will use the cash value to pay your premiums until you die.
Most policies have a 31-day grace period wherein you can pay the premium with no penalty or interest. If you have a term policy and do not make the payment within this grace period, the insurance company will usually terminate the policy. If you have a permanent policy, you can authorize the insurance company to draw your premium from your policy’s cash value.
Most policies have a life insurance contestability period of two years after you buy the policy. During this time, if the insurance company finds that they issued the policy under misrepresentation or withholding of information by you, they can declare your policy void.
Some term policies have a return of a premium feature that allows for a refund of all or some of the life insurance premiums you paid through the term of the insurance if no death benefit was paid. The premiums for policies with this feature tend to be higher, and you must be careful not to miss any payments throughout the term in order to take advantage of this feature.
Some policies have a provision that allows you to collect a significant portion of the death benefit while you are still alive should you become terminally ill. The money can be used at your discretion to pay for medical expenses or even to do specific things with your family and friends while you still can. The amount you take out early will be subtracted from the death benefit payment along with interest.
Term insurance plans cover you for a term of one or more years, and it pays a death benefit only if you die in that term. However, even if you don’t die within the term, you have not wasted your money any more than when you buy car insurance but never have an accident.
You have bought yourself peace of mind that your beneficiaries will receive the death benefit if you should die within the term. Term policies typically offer the lowest monthly premium and are usually the best option if you have a limited budget or a temporary need. You can typically renew term policies for one or more terms even if your health has changed, however each time you do so; the premium may be higher.
There are four kinds of term policies:
To determine how much life insurance you need, it’s best to look at your surviving family’s immediate, ongoing, and future financial obligations, and compare that with your financial resources. Below are examples of each type of need:
Financial resources can include your partner’s income, savings, income-producing assets, and investments. Considering all these obligations and resources, the difference between the two is how much life insurance you need.
Most plans do require medical testing and charge premiums based on the level of risk they assign to you based on the testing. However, even if you are not in top health or have a serious health condition, there are still some options available with guaranteed life insurance plans, although this comes at the cost of a higher monthly premium and a lower death benefit.
A graded benefit life insurance is method insurance carriers use to offer coverage for individuals who aren’t in the best of health and otherwise may not qualify for coverage by limiting the death amount payment should they die in the first two or three years.
For instance, if you bought $10,000 in coverage, a company will pay 40% if you died in the first year, 75% in the second year, and only in year three onwards will your beneficiaries be entitled to the full amount. When buying this type of coverage, you need to proceed with caution and first try to get a level benefit plan, which has no waiting period.
This depends on who you ask and what they are attempting to sell you. A child’s policy can provide a saving vehicle, the ability to buy more coverage in the future without proving insurability and also pay the death benefit in the event of a child’s death, which can be used for burial expenses.
However, most child coverages aren’t large enough to begin with (maximum benefit is typical $25,000), and they aren’t supporting a family financially, so none depends on them. Besides, cases for a child’s death are very slim, statistically, and although it may be the most tragic experience, life insurance won’t really help.
The life insurance underwriting process is a method through which carriers assess your risk based on the medical exam (if needed), answers on the application, and databases search results (Medical Information Bureau, prescription database report, and Motor Vehicle Report) to conclude whether or not to approve, deny, or rate up a life insurance policy.
“No-questions-asked life insurance”, also known as guaranteed issue life insurance, is a policy which ensures your acceptance regardless of your current or past health challenges. There are three caveats to these plans. Firstly, there is a graded benefit clause which will not pay the full death benefit amount should you pass away during the first two policy years.
Secondly, these policies are overpriced, and the maximum death benefit will not exceed $40,000. Thirdly, you must be between the ages of 40 and 85 to qualify for guaranteed issue plan, so if you are younger than 40 years old, you will not be able to purchase these policies. Here is my advice: You should never, ever buy guaranteed issue coverage unless you’ve exhausted all other options and you can afford premiums.
That depends on the insurance company and the type of coverage that you applied for. Generally speaking, the underwriting process for a traditional, fully underwritten process can take anywhere from two to eight weeks. A no-exam or final expense policy can be issued from a few minutes after submission to about two weeks. The delivery time is about a week after the policy’s approval.
If you apply for a traditional policy, then yes, you will have to undertake the exam. However, there are a few companies who offer no-exam life insurance with up to one million dollars of life insurance coverage. Additionally, policies such as final expense are approved on a simplified issue basis, and do not require you to take the exam.
Would you buy a cat in a bag without checking it first? After all, insurers are on the hook for millions if you die soon after getting the policy. They increase their odds by conducting an exam and consequently decide how risky you are to insure. Additionally, they make sure not to insure the unqualified individuals who may have a terminal illness or otherwise are likely to die soon.
A third-party nurse will go over the questions you answered on the application and record your pulse, blood pressure levels, height and weight, and also take a blood sample. Sometimes, depending on your age and the company, a urine sample and EKG will also be required.
Life insurance death benefit is the amount of money the insurance company pays the designated beneficiaries upon the insured’s death, provided the policy was in force at the time of the incident.
A life insurance beneficiary is an individual, entity, trustee, or estate named by the policy owner to collect the death benefit proceeds upon the insured’s death. There are two types of beneficiaries:
Final expense life insurance refers to specific protection individuals purchase to cover charges and affairs that are associated with your such as burial, funeral service, or final medical bills. Final expense policies are whole life with a fixed premium amount that lasts for as long as the insured lives.
This question has been debated for as long as life insurance been around. For most, term life insurance will be the preferred choice because it offers the most significant benefit amount for the lowest price. Furthermore, since most expenses aren’t permanent (mortgage balance, young children), getting the most amount of coverage in the most crucial period when the family is young is a sensible option.
That said, there are a few cases for a permanent policy which can be best used for estate planning or when you buy a small final expense policy.
Life insurance riders are add-on provisions to enhance or customize your current coverage to fit your needs. Some riders come at no additional cost and are baked into the coverage. It’s worth noting that riders are purchased with the policy and can’t be added later. Here are a few common purchased riders:
That’s the easy part because every life insurance website and his dog offer life insurance quotes online. However, since you, the client, may not know what plan is best for you based on your health history, you may find that you’ve applied to the wrong policy with the wrong company. Moreover, the quotes you see online aren’t the rates you will actually qualify for.
I have seen, over the years, many individuals applying for a guaranteed issue life insurance when they could get traditional coverage without the waiting period. I understand that you may not want to be contacted by phone, and I can also see your concerns about annoying salespeople.
This is why you need to do research on the broker you want to work with rather than looking for the best rate. Choosing the right broker is the key to obtaining the best policy.
Life insurance’s primary purpose is to prevent financial hardship for your loved ones. Whether it’s burial expenses or mortgage balance you worry about, a proper life insurance policy can help your beneficiaries avoid this misfortune. First, let us clarify two fundamental distinctions. A funeral is different from proper disposal of the body.
No one is entitled to a funeral (for those who say, “I don’t really care what happens when I die”), so if no one pays for your funeral service, guess what? The local government will take over and bury you in a potter’s field or cremate your body.
If, however, your loved one insists on having a proper burial and funeral service, they can pay for this themselves (which you may not want to burden them with) or use any assets you left behind to pay for it.
The person who signs the contract with the funeral home is legally obligated to pay for it. Hence, buying a policy isn’t really for you. It’s to prevent the extra headaches someone you love has to go through when they need to deal with all you left behind.
I get this question all the time, and I always respond with the same definitive “NO, you shouldn’t.” Since many people consider term life insurance as a total waste of money, insurance companies had to come up with an approach to lure you in.
What if you pay for 20 years and we will give you your money back? The problem is that you will spend two to three times as much in premiums, and if you outlive your term period, you will only get your money back without any additional interest, so your money just worked for free. Why don’t you just buy term life and invest the difference somewhere else, where you can have total control?
When you buy life insurance, don’t try to estimate when you will die so that you can pay the least in premiums. You obtain a policy to safeguard against financial catastrophe for your loved ones. You also want to have peace of mind that if it’s your time to go, the ones you love most can still live on with dignity.
Your current and past health aren’t the only parameters the carrier uses to evaluate your application for life insurance. Moreover, since life insurance is meant to protect against financial devastation to your heirs, the insurance company needs to make sure you are not over-insuring yourself and that the payment is within your means.
If you make 20K per year and want to purchase 20-million-dollar insurance where the premium is so high, that you can’t afford it, this will trigger a red flag, and you most likely will not be approved for coverage. Lastly, any amount you choose to buy, you must justify it through income or assets that you are trying to protect.
Sure, provided there is an insurable interest in a relationship and with the insured’s consent. Insurable interest is a reason to buy life insurance for someone else because you could undergo a financial disaster if they die. A relationship can be:
Thankfully, no. Life insurance prices are fixed by law and are subject to the insurance carrier and the state’s department of insurance approval. If that were the case, brokers, agents, and the insurance companies couldn’t compete ethically in the marketplace, and consumers would be even more baffled with life insurance.
As a client, you may choose to work with a broker because he can shop all companies and offer you the best one for your situation. Besides, a broker doesn’t charge a fee because he gets paid by the insurance carrier.
Sure, you can, provided there is a financial need for it. You may want to supplement your current policy from work or add another term life insurance because you just had a new addition to the family. The insurance company is more interested in the total death benefit amount you currently hold rather than in how many policies you have.
Risk classification, also called health classification, is a method the underwriter uses to determine the risk you pose to the insurance carrier. A fundamental concept is the higher the risk, the more you will pay in premiums; the less of a risk, the less you will spend.
Additionally, since it’s impossible to determine one person’s mortality with absolute accuracy, the carriers group individuals with similar risk and calculate their rates. These groups are called classes.
Your designated beneficiary will have to file a claim with the carrier. He will also need to supply the death certificate (not a copy) along with the deceased’s policy number, social security number, and address.
In insurance lingo, brokers refer to this question as part of the financial underwriting process. The amount of coverage you can buy must reflect your economic value. There are a few ways to justify the requested face amount by calculating your assets and liabilities.
However, most companies follow this simple formula: the younger an applicant is, the more coverage he needs because the children are still young, the mortgage balance is still outstanding, so passing away in these critical times could devastate the beneficiaries.
Nevertheless, once the applicant is older and has fewer liabilities to protect (children are older, the mortgage is paid off), the less coverage he will qualify for.
Here is a basic formula to estimate the maximum coverage you can receive:
I tend to agree with the notion that all felons who paid their dues to society deserve a clean slate. After all, nobody is perfect. However, insurance companies are in the risk evaluation business, and they view applicants with a criminal history as high-risk individuals. They refrain from insuring felons because, within three years of release, about two-thirds (67.8%) of released prisoners are rearrested.
So, if you are a felon who bought a policy and went back to jail, they can’t rescind your coverage now, and if something happens to you while in prison, they must pay the death benefit. The longer time since your felony conviction (preferably over 10 years), the better chance you will have to get coverage at a reasonable price.
I see that quite often, and many times, an applicant can reapply with a different company and get coverage. However, a better way to remedy this is first getting the facts right. What was the reason you were denied coverage in the first place (see a letter of declination if you don’t know the reason)?
Second, get a good broker and disclose those facts to see if he can match you with a different insurer. The worst thing you can do is to apply to eight different companies to see who can issue you a policy because the more you get declined, the easier it is for other companies to follow suit and not approve your policy.
First thing first: If you or someone you know is considering suicide, please talk to someone about your thoughts. The suicide provision states that, if you die within two years after buying the policy as a result of suicide, the carrier will contest your claim and will not pay your beneficiaries. After two years, an insurer can’t challenge the death claim and must pay the benefit.
If I had to rank the number one reason clients are so angry, it is discovering they just bought accidental death and dismemberment (AD&D) and not a traditional life insurance policy. Since many potential buyers don’t understand life insurance nuances, they fall prey to the wrong brokers or agents who just sold them on the idea that they bought life insurance at the best price.
An accidental death and dismemberment policy pays a death benefit to beneficiaries ONLY if you die as a result of an accident-related event. If you had cancer, heart attack, stroke, or any disease and died as a result—you guessed it—your beneficiaries will get zilch.
You probably do. Most group coverages aren’t portable, which means if you lose or quit your job, you also let go of your insurance coverage. Most importantly, group coverage doesn’t offer sufficient protection and typically offers two or three times your yearly income, which by all accounts, isn’t enough. (The recommended amount is 10 times yearly income.) My advice is to get it through your job if it’s free or at a reasonable price and supplement it with life insurance outside your workplace.
That depends. You should ask yourself these questions first.
If you only need burial insurance for them and you have the money to cover it, or they have enough assets to pay for it, skip the policy and call it a day. You don’t need it. You can also read more here.
Universal life insurance, also called UL, is a permanent type of coverage that provides guaranteed death benefit payment to heirs, cash value accumulation on a tax-deferred basis, and the ultimate advantage of flexibility. A portion of your premium payment goes to cover the cost of insurance (COI), and the remainder is parked in a designated account to earn interest.
Most companies give you three to four different accounts from which to choose based on your comfort level and financial goals. Most coverages are rigid. In essence, term life offers great costs but short duration, whole life provides a lifetime’s protection but with astronomical prices. UL provides the flexibility to skip premium payments or to adjust the face value in the future (increase or decrease) should you want to.
Key person life insurance is protection a business owner can purchase on key employees to cover premature death. A key employee is a valuable asset to a company because he/she holds a special talent or skill that is hard to replace. For instance, if you own a tech company and have a highly skilled developer whose death would essentially cause your business to diminish overnight, you may consider key person life insurance.
This is probably the most commonly asked question. I hate to disappoint you, but it depends. I need to know your age, gender, tobacco use, family medical history, and current health. Additionally, I need to know the requested face amount and policy type just as a starting point.
Here is a post I wrote about life insurance sample rates which reveal costs based on age and gender. Keep in mind that if you aren’t in good health, the prices will be inaccurate.
I typically get this question when someone has already spoken to another agent or calculated rates online. “Hey, broker such-and-such told me I can get $250k 20-year term for $34 per month.” My response is usually, “Did the other broker question you about your health history,” and the answer is typically, “No, they just calculated the preferred rates.”
Note that it’s the underwriter and not the broker who determines your final costs. A broker’s job is merely to estimate the rates as accurately as possible based on your unique circumstances so that you will not be surprised when the underwriter comes back with the final prices.
As mentioned before, life insurance underwriters specialize in assessing mortality risks. Unfortunately, some diseases, such as cancer, cardiovascular, diabetes, or stroke found in parents can increase the likelihood of you developing the same conditions. Keep in mind that most companies are only interested in death before the age of 60 of an immediate family member, and you will not be denied coverage if this is the only risk you pose. Instead, you will be charged a higher rate.
Having a bankruptcy on your record poses another risk to the insurance company. You may be the healthiest person on the planet and still be denied coverage. The reason is simple: the carrier is the last one to profit from your policy. They pay for the medical nurse to perform the exam, agent’s commissions and doctor’s medical records among many other expenses before they see a dime.
If you just had a bankruptcy, the insurer believes that you will not pay for the coverage you just acquired. (After all, you filed for bankruptcy. How can you afford to pay for life insurance?) So, the cost of doing business isn’t worth it at this point. However, two years after the bankruptcy is discharged, you can reapply without any issue.
Mortgage protection insurance or MPI is a type of life insurance which pays your mortgage balance in the event of your death. The beneficiary is the lending institution and not your immediate family. Additionally, the face value will diminish over time in direct proportion to your mortgage balance.
Nice try! You probably know that smokers pay two to four times as much as non-smokers do, but this trick wouldn’t work. To get the best non-smoker rate, you must abstain from tobacco for three to five years (each company has a different underwriting guideline).
Some companies will give you a standard non-smoker rate after one year of abstinence. It’s worth mentioning that you should never lie about your smoking habits to the insurer.
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Term life insurance provides coverage for a specific period, such as 10, 20, or 30 years. It is typically more affordable but does not accumulate cash value. Permanent life insurance, on the other hand, offers lifelong coverage, builds cash value over time, and often includes an investment component.
Yes, with certain types of permanent life insurance policies, such as whole life or universal life, you can borrow against the cash value. However, it’s important to consider the potential impact on the death benefit and consult with your insurance provider to understand the terms and conditions of borrowing against your policy.
Life insurance premiums are determined based on factors such as the type of policy, coverage amount, the age and health of the insured person, lifestyle choices, and the duration of the policy. Generally, younger and healthier individuals pay lower premiums.
The amount of life insurance coverage you need depends on factors such as your income, debts, financial obligations, and the needs of your dependents. It’s advisable to assess your current and future financial needs with the help of a financial advisor or life insurance professional.
In most cases, the death benefit from a life insurance policy is not subject to federal income tax. However, there may be exceptions if the policy has certain characteristics or if the estate is large enough to trigger estate taxes. It’s advisable to consult with a tax advisor for specific information related to your situation.
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption