Life Insurance FAQ

Life insurance is a legal contract (policy) between you (the insured) and an insurance company (the insurer). In the contract, you agree to pay a fee (premium) to the insurance company, either periodically (monthly, quarterly, semi-annually, or annually) or in a lump sum. In return, the insurance company agrees to pay a sum of money (face amount or death benefit) to a person (or persons) or entity (e.g. a trust) you designate in the contract as the policy’s beneficiary (provided the policy is in force at the time of death).

If you have a spouse (or partner) and/or children that would suffer financially if you were to die, you need life insurance. There are others who need life insurance (e.g. business partners), but the main incentive to own life insurance has always been to ensure your loved ones will be taken care of financially should you die.

You should purchase life insurance now if:

• If you are married (or about to get married) and your spouse depends on your income.
• If you have young children (or about to).
• If you are married and own a home with a mortgage.
• If you have a large estate and expect that your heirs will be hit with a big estate tax bill.
• If you are a partial owner of a business and have a buy/sell agreement with your partner(s), but no way to fund the buy-out of your partner’s shares should he/she pass away (and vice-versa).
• If you have a special-needs child who will need special care should you and/or your spouse die

There are several methods of determining how much life insurance you need. One method is using the multiple of income method, using a multiplier of your income to determine the benefit amount. Between 25 and 35, we recommend 20-25 times your income; between 35- 50, multiply your income by 15; above 50, use a factor of 10. These are only general guides, as every situation will vary.

You can also use our calculator, which uses a different method. Ultimately, the cost will be a factor too, as you have to maintain the premium payments over time.

Now that you have determined how much you need, hopefully, the insurance company will offer you that amount. Insurance companies use multipliers as described above and will not provide you with more coverage than they think you need, based on their formulas. There is some flexibility there, so if you have needs that exceed these formulas, your agent can help you “sell your case” to the underwriter.

No. We are paid a commission by the insurance company if we assist you with getting your policy in force.

There are basically two types of life insurance – permanent and temporary. Whole life insurance and Universal life insurance are two types of permanent life insurance, both providing coverage for the entire life of the insured person. Term life insurance provides temporary coverage for specified periods of time (the term), typically for 10, 15, 20, 25 or 30 years.

Simply stated, it’s life insurance protection lasting a limited number of years (typically 10, 15, 20, 25 or 30 years) that expires without value if the insured survives the stated term period. Most term policies can be renewed (at higher premium) at the end of the term or may be able to be converted to a permanent policy during the term period.

If you have a specific time period you need covered, such as for a 30-year mortgage, select the term that will cover that period. As life insurance can be viewed as income replacement, some people try to get coverage lasting until retirement age, while others get coverage lasting until their young children are beyond college age.

Your insurance coverage expires at the end of the term. You will be given an opportunity to renew the policy but at a much higher premium. It’s usually much less expensive to purchase a new policy if your health hasn’t changed.

Most term policies have conversion privileges, which allows you to convert your term policy to a permanent policy during the term period (in some cases, the conversion option period is shorter than the term period). The main benefit of conversion is that your medical insurability is guaranteed (medical underwriting is not required for the new policy).

Permanent life insurance, as the name implies, is life insurance that lasts for your lifetime. The two main types of permanent life insurance are whole life and universal life insurance.

Many people automatically assume that if they want a life insurance policy that will not expire, they need to purchase whole life coverage . While whole life insurance can be an excellent option, it’s important for consumers to be aware that it’s not the only option for permanent coverage. Before choosing a policy, it’s a good idea to compare life insurance policies carefully so you can be assured of making the best choice for your specific needs.

Mortgage life insurance is reducing term life insurance. The death benefit decreases annually to keep level with your mortgage balance. Due to the lower cost of level term insurance, mortgage insurance has fallen out of broad use today.

Unfortunately, we can’t guarantee the quotes. They are estimates based on the information you provide on the website and application process. The final quotes are revealed at the end of the underwriting process and will be based on your application information and health and other information gathered during the process. If you have answered the questions honestly and there are no surprises during the underwriting process, there’s a strong chance your final quotes will match or be close to your original quote.

You can find out if you’re getting the best life insurance rates on this website. Our quote engine searches quickly to find you the best rate and policy. It’s to your advantage to have us working for you because, as an independent broker, we work with the major life insurance companies in the market today. As we are not beholden to any one company, we always look after your best interests first and foremost.

Life insurance companies factor in health and lifestyle information to determine the risk insuring you would present to them. In order to determine premiums based on different degrees of risk, the insurance companies have established health (or risk) classes. There are no industry standards, but the health classes are typically Preferred Plus, Preferred, Standard Plus and Standard for non-tobacco users. Below these classes are sub-standard (or rated) categories. There are also separate classes for tobacco users.

From the A.M. Best website: “A.M. Best’s Financial Strength Rating is an independent opinion of an insurer’s financial strength and ability to meet its ongoing insurance policy and contract obligations. It is based on a comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance and business profile.”

As you are trusting an insurance company to be there to pay a claim, if needed, you want to make sure the insurance company will be around when needed. A Superior A.M. Best rating (A++ or A+) for an insurance company is a strong indication that the insurance company is financially sound (we also recommend looking at other independent ratings, such as Standard & Poor’s, Fitch and Moody’s).

For term life insurance, we recommend the least expensive A-rated company, unless you have a preference for a company you are familiar with. As there is very little difference between term policies, we recommend the lower-cost options.

As permanent policies have several “moving parts,” we can review your options with you and recommend the best policy for your needs.

The answer is yes it will but you still can get competitive rates. Some companies charge less for tobacco use than others. If you smoke cigars occasionally or chew tobacco occasionally, a few companies will still offer preferred non-smoker rates. Contact us at 866-691-0100 so we can get the lowest possible rates that match your situation.

Also, if you get a life insurance policy that includes a rate for tobacco use, it’s possible to lower it in future years if you quit tobacco for a number of years and remain healthy. We just go back and work with the insurance company to try to lower your rate and in most cases we can do that for you.

There are different rate classes for life insurance. When calculating the exact rate for you, the company does take your weight into consideration. There is a height/weight chart on this site that can give you an idea how weight affects the way insurance companies might judge your rating class. Our quoting engine takes your height and weight into consideration when calculating your rate class and premium.

The application processing time varies case to case, but the average time is 3 – 6 weeks from the time we receive the application in our office. The factors that slow down the process are applicant failure to completely answer questions or send in additional information and; physicians’ slow response in submitting medical records to the insurance company

Most people name their spouse (or partner) as the primary beneficiary and their children as secondary (or contingent) beneficiaries. Secondary beneficiaries receive the death benefit if the primary is no longer alive. You can name any person (or entity) that has an insurable interest in you (meaning they would suffer a financial loss if you were to die).

Yes, all insurance companies allow change of beneficiary with a simple form. Your beneficiary must have an insurable interest, so make sure your new beneficiary fits that description.

Underwriting is the process of selecting risks and classifying them according to their degrees of insurability so that the appropriate rates may be assigned. The process includes rejection of risks.

The underwriter reviews the application, medical exam, medical records (if needed), motor vehicle report and other records, if needed, and determines the health (risk) class for the applicant. This will determine the premiums (rates).

Social Security numbers are used for the purpose of identification whether in obtaining your medical information and records or paying out benefits to your beneficiaries. If the application asks for a social security number, it must be provided.

Financial information is required on every application to determine if the amount of insurance is appropriate to your income. The information is kept private and used only for the purpose of underwriting your application only.

The insurance company does not run a credit check as a part of the underwriting process. You may be asked to provide additional financial information during the underwriting process but no official check of your credit will be performed.

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Bankruptcies can affect your life insurance application depending on several factors, such as how recent the bankruptcy, what type of bankruptcy and the date of its discharge. Each bankruptcy is taken on a case by case basis by the insurance company. We can help to determine if there will a problem based on your specific details.

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If you are applying for a no-exam or “accelerated underwriting” policy, chances are you won’t need a medical exam. However, most policies today require an exam.

The exam typically includes blood and urine samples, blood pressure readings, height and weight measurements and questionnaire (additional tests, such as EKG, might be required due to age or death benefit applied for). As it is recommended that you fast for eight hours prior to the exam, we usually suggest you get your exam first thing in the morning, if possible.

The results of the blood and urine tests will be available to you. They will either be mailed to you or be available online. The results come directly from the insurance company and/or the medical exam company. We do not receive them as they are confidential.

Your doctor is looking at your overall health and morbidity and working with you to improve conditions and maintain a healthy life and lifestyle. The underwriter is looking not only at mortality but is also governed by the policies of the insurance company. It is the underwriter’s job to determine your specific risk. There are some factors to which the underwriter has some discretion and others which are clearly laid out by insurance company policy.

If your application has been approved other than it has been applied for and your rate has been increased, we are happy to explain the circumstances which led to that decision as well as advocate on your behalf with the underwriter.

The APS is a report the insurance company requests from an applicant’s personal physician when additional information is needed to support medical information disclosed in the application or in the medical examiner’s report. If there is no significant medical history, at the discretion of the underwriter, an APS might not be required. Due to physicians’ busy schedules, it sometimes takes quite a while to receive the APS from a physician.

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If it has been a year or longer since you quit smoking, some companies will give you Standard Non-Tobacco rates. If it has been 2 or 3 years, a few companies will give you Preferred Non-Tobacco rates.

All of the insurance companies we work with require applicants to be U.S. residents (U.S. citizens or those that have permanent visas (green cards). U.S. residents who have temporary work visas can get coverage in some cases.

If you do travel frequently, the underwriter will want to know details of your travels, including countries visited, frequency and reason for visits (business or travel). If you travel to countries that are on the U.S. State Department’s list of countries to avoid, you might not qualify for life insurance. We know which insurance companies allow the most leeway in these lists, so check with us before you apply.

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We recommend that you reveal all information that’s materiel to the insurance application. When in doubt, it’s best to over-reveal than under-reveal. The insurance company has the right to contest a claim in the first two years of the policy if they suspect a precipitating cause of a death was known about but not revealed in the application.

Yes, insurance companies will refund any deposit if you change your mind while your application for insurance is pending. Also, after your get your policy you can have a full refund under a 20-30 day free look period. If, for any reason, you decide to cancel your policy after you paid for the policy, you can do that without any questions asked within the free-look period.

Some term life insurance policies are renewable. If so, you will pay up to the guaranteed maximum renewal premium, as shown in the policy. Non-guaranteed renewal rates, as shown in the policy, give you a projection of what the renewal rates will be. The actual renewal rates my be higher or lower, but they will never be more than the guaranteed maximum. The insurance policy is your contract with the insurance company, so please review it carefully.

At the end of the term period, if you can qualify for new insurance, you can re-apply for lower rates than the renewal premium with a new insurance company or possibly with the same insurance company your expiring policy is with.

In a level-premium term life policy, your premiums will never change during the term period. If you choose to renew your policy at the end of the term, your premiums will increase significantly. In some flexible-premium universal life policies (without lapse protection), your premiums can change.

If you miss a premium payment most policies have a grace period of 30 days. At the end of the grace period, your policy will lapse and will no longer be in force. In some cases, the insurance company might reinstate the policy if you pay the premiums due.