| Should I buy term life or permanent
life insurance? |
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| The
type of
life insurance
you need
is dependent
upon your
particular
needs. Term
life insurance
is appropriate
and more
cost effective
for temporary
needs which
may be a
period of
one to thirty
years. On
the other
hand, permanent
life insurance
is better
for permanent
or long
term needs.
In some
cases, a
mix of both
term life
and permanent
life insurance
may be suitable.
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| What
is the difference
between
whole life
and universal
life insurance?
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| Whole
life insurance
and universal
life insurance
are both
types of
permanent
life insurance;
however,
universal
life has
flexible
premiums
and an adjustable
death benefit.
Whole life
insurance
premiums
are fixed
level and
the death
benefit
is not adjustable.
Another
difference
between
these two
types of
insurance
is the cash
value of
a universal
life insurance
policy is
interest
sensitive.
If interest
rates go
up, so will
the cash
values.
A whole
life insurance
policy's
cash value
is not very
interest
sensitive
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What is
the advantage
of level
term life
insurance
vs. yearly
renewable
term life
insurance? |
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The advantage
of level
term life
insurance
is that
the premiums
remain level
over a specified
period of
time. Yearly
renewable
term life
insurance
has a lower
initial
premium;
however,
the premium
rises each
year. Yearly
renewable
term life
insurance
is only
cost effective
for a few
years because
of the rising
premiums.
If you need
term life
insurance
protection
for more
than a few
years, then
a level
term life
insurance
policy can
cost less.
Please carefully
consider
the length
of the level
premium
period that
will suit
your needs.
For example,
if the primary
purpose
of the death
benefit
is to provide
income to
support
very young
children
and/or to
fund college
education
expenses,
a 20-year
level premium
might be
appropriate.
If these
children
are already
in their
young teens,
you may
need only
a 10-year
level premium
(longer
level premium
policies
are more
expensive).
After the
level premium
period expires,
most policies
require
you to requalify
with medical
underwriting
in order
to receive
a favorable
premium.
If you do
not or cannot
requalify,
the premium
typically
rises dramatically
after the
expiration
of the level
premium
period.
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| What riders/options/features are available
on life
insurance
policies? |
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The
following
riders/options/features
are available
with some
life insurance
policies
- Conversion
Feature
– allows
the
owner
of a
term
life
insurance
policy
to exchange
(or
convert)
the
policy
to a
permanent
life
insurance
plan
(whole
life
or universal
life)
without
evidence
of insurability.
- Spousal
Discount
– if
both
a husband
and
a wife
or two
business
partners
purchase
life
insurance
at the
same
time,
then
a discount
will
be deducted
each
year
from
the
total
cost
of both
policies.
- Children’s
Insurance
Option
– provides
term
life
insurance
coverage
on each
child
of the
insured’s
family.
- Accelerated
Death
Benefit
- accelerates
the
availability
of a
portion
of the
death
benefit
if the
insured
is diagnosed
as terminally
ill
by a
licensed
physician
(must
be terminal
within
12 months).
- Waiver
of Premium
Option
- the
insurance
company
will
continue
to make
your
life
insurance
premium
payments
if you
become
disabled.
- Accidental
Death
Benefit
Option
– an
additional
death
benefit
will
be paid
if you
die
by accidental
means.
- Guaranteed
Purchase
Option
- guarantees
that
you
may
purchase
additional
life
insurance
in the
future
without
proof
of insurability
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| What is involved in the life insurance
application
process? |
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The life
insurance
application
process
consists
of submitting
an application
and a medical
exam to
the life
insurance
company
. It may
also be
necessary
for the
life insurance
company
to contact
you for
a brief
telephone
interview.
The medical
exam can
be scheduled
at your
home or
work and
is paid
for by the
life insurance
company.
The exam
typically
consists
of medical
history
questions,
blood/urine
specimen,
blood pressure/pulse
readings,
and height/weight
readings.
Sometimes
additional
requirements
are necessary,
such as
an EKG.
It is recommended
that you
schedule
your exam
early in
the morning
because
test results
are often
better at
this time.
Once we
receive
your completed
life insurance
application,
it will
be submitted
to the insurance
company.
Underwriting
usually
takes approximately
4-8 weeks.
Assuming
your life
insurance
policy is
approved,
we will
send it
to you. |
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| When does my life insurance coverage
begin? |
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Your life
insurance
coverage
begins once
the policy
has been
issued and
all of the
delivery
requirements
have been
returned
to the insurance
company.
Delivery
requirements
may include
a premium
payment,
statement
of health,
delivery
acknowledgement
form or
amendment
of application.
Temporary
coverage
during the
underwriting
process
may also
be available
with some
insurance
companies.
In cases
where temporary
coverage
(also called
conditional
coverage)
is available,
coverage
begins once
the completed
application
has been
returned
to the insurance
company
with a premium
payment
and you
have completed
the medical
exam. The
coverage
is contingent
upon you
qualifying
at the rate
you applied
for and
a few other
factors.
Read the
conditional
receipt
of your
life insurance
application
for additional
information. |
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| How is an applicant classified? |
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| The
life insurance
company
uses factors
such as
personal
medical
history,
family medical
history,
financial
situation,
and sometimes
avocation
and occupation
to place
an applicant
in a specific
rate class. |
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| What if I receive a higher rate
than I applied
for on my
life insurance
policy? |
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If you apply
for life
insurance
through
TermInsurance.com
and you
receive
a higher
rate on
your policy
or you are
declined,
we will
automatically
shop your
life insurance
coverage
with other
life insurance
carriers.
First, we
will identify
(on a "no
names" basis)
other insurance
companies
that may
be more
liberal
given the
reason you
received
a higher
rate or
were declined.
Then (again,
without
disclosing
your name)
we will
send each
of these
insurance
companies
the information
they need
to make
an estimate
of the rate
for which
you would
most likely
qualify
based on
their particular
underwriting
criteria.
Once we
have received
the alternative
rates, you
will be
contacted
by a TermInsurance.com
Customer
Service
Representative
who will
explain
your options.
You will
have the
opportunity
to stay
with the
original
life insurance
carrier
you applied
with or
submit an
application
to the alternative
carrier
who may
offer a
better rate.
One of the
benefits
of this
unique service
is that
you do not
have to
complete
another
medical
exam or
application
for us to
shop you
with other
carriers!
We simply
use your
first application
and medical
exam results. |
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| What is the tax treatment
of life
insurance
death benefit
proceeds? |
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Life insurance
death benefit
proceeds
are generally
not subject
to income
taxation
provided
they are
paid in
a lump sum;
however,
there a
few exceptions
to this
rule. If
a settlement
option is
used other
than the
lump sum
option,
then the
interest
earned on
the principal
death benefit
is taxable.
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| Should I purchase life insurance
on my spouse? |
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In most
cases, yes.
At the very
least, if
your spouse
contributes
to the family's
annual income
then adequate
protection
would be
needed to
supplement
his or her
income should
he or she
die. If
your spouse
does not
have an
income but
is a homemaker,
then life
insurance
protection
may be needed
to cover
daycare
and other
costs associated
with the
loss of
a parent.
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