Learn about life insurance with a few of our most popular answered questions.
- What is the difference between term and whole life insurance? – Term Life insurance simply pays a defined benefit within a defined period of time (the “term”) upon the death of the policyholder. Term life is typically purchased by people age 21-65 to replace the income that would be lost if they died. Premiums typically cover only the cost of insurance; no “cash value” is accumulated. Whole Life (and Lifetime Universal Life) insurance is generally designed to provide a level amount of coverage over the life of the policyholder. These policies accumulate cash value and are often used as an element of estate planning.Final Expense insurance is an increasingly popular form of whole life coverage sold in small amounts (up to $25,000) and designed to pay for burial and other final expenses. Final Expense coverage typically does not require medical underwriting.
- What’s covered and not covered on the modern life insurance policy? – Modern life insurance policies generally cover death by any cause, at any time, in any place, except death by suicide within the first two years of a policy (one year in some states). An exception to this is a single-peril policy such as an accidental death policy that pays when the death was caused by a covered accident. Accident-only life policies are popular because there is no underwriting and no exam required. Accident is today the #1 leading cause of death for Americans age 1-45.
- How much life insurance do I need? – Each person’s situation is different depending upon his or her age, income, debts, lifestyle, and the number and age of dependents.Many financial experts recommend that a [head of household?] be insured for at least 10 times his or her income. Caregivers who are not working outside the home are advised to have at least $300,000 in coverage.For a quick, easy, and confidential way to estimate your insurance needs, use our “Life Happens Needs Calculator.”
- How long do I need life insurance protection? – This is for you to decide based on your age, family obligations, financial situation, and other factors. Some people cancel or reduce their life insurance as they pay down debt and their children grow up.; others maintain life insurance throughout their life as an estate planning too.Luckily, you can change your mind. If you decide you want additional insurance or coverage for a longer term, you can generally reapply for a new policy, and cancel the previous one upon approval of the new one. You are not obligated to keep any policy for the entire duration of the term.The most popular choice among our customers is a 20-year term life insurance policy. That typically provides coverage for a large mortgage balance and protects a family as children are growing up.
If you’re looking to have insurance for funeral costs and other final expenses, however, you should consider some form of universal or whole life insurance.
- What is the difference between insurance companies? Why are some less expensive than others? – Life insurers compete through underwriting strategies based on factors related to the health and lifestyle of applicants.So, a customer with certain characteristics might find that one company to be the least expensive option, while another customer with different characteristics would find a different company to be the least expensive.