Life Insurance FAQs

Frequently Asked Questions about life insurance

Why should I have life insurance?
It’s unfortunate but people die - some sooner than later. The important point is to do what’s right for those you love. A person gets life insurance to make sure that there is money available to maintain the financial life for those who will still be living and have a future. It’s a selfless decision in a way since you are looking out for your spouse and/or your children just like you would protect them from dangers and difficulties in life. At Lifeinsure.com, our staff and our insurance advisors are here to help you gain more understanding of this subject and help you select the right life insurance policy.

There are benefits for you from having enough insurance while you are living: You’ll feel better knowing the ones you love will be able to continue their lives without unnecessary financial disruption; if you have permanent life insurance (whole life or universal life) you can build cash value that can grow tax free. This can help give you the freedom to do other things with your money and investments because you know you have an asset your family can count on – life insurance.


What types of life insurance are available?
There are two main types: Term vs. Permanent Life Insurance:

1. Permanent life insurance is designed to last for your whole life. There are two main categories: Whole life and Universal life .

2. Another type of life insurance is Term Life which varies by length of time from 1 year to 30 years. There is also a new type of term life policy that refunds you all premiums paid if you keep the policy for the term period. Learn more about return of premium term life insurance for your own term life insurance comparison.

How much coverage should I have?
The easy answer is you should have enough coverage to replace the income that you would have earned had you been alive to earn it. How do you calculate that amount? There's a section on this site that shows you how to calculate the right amount. Find out how much life insurance you should have. There is also a very simple method of calculating the right amount of life insurance for you - take a multiple of your income that is 10 times to 15 times your annual gross income.

How do I choose the right company?
Buying life insurance is a little more complex than purchasing a car or a television. When you purchase a policy you are buying a promise, a contract to pay something in the future vs. buying a commodity or something tangible. It's very important for you to examine the company that's backing your policy as well as considering the cost of the policy. One of the important items to consider when looking at a life insurance company is the financial strength rating of the company. Insurance company financial ratings are described further on this site.

How do I know if I'm getting the best rates?
You can find out if you're getting the best life insurance rates here online at lifeinsure.com. Our search engine searches quickly to find you a customized rate and policy. Search for instant term life insurance quotes and instant quotes on return of premium term life policies and universal life insurance policies. For whole life policies, we'll need to gather some basic information from you to deliver an accurate quote. It's to your advantage to have lifeinsure.com working for you because we're not affiliated with the companies we provide for you. Therefore, we can look after your best interest without a conflict of interest.

What are the steps that I would go through?
First, choose the coverage amount you desire and then get quotes right here on the site. If it's term, return of premium term or universal life coverage you’ll get a market survey right here on the lifeinsure.com site. Then choose the policy that suits your needs and move to the next step.

The next steps are application to the insurance company which we’ll help you with, a short medical exam provided by the life insurance company you choose at no cost, a review of your information by the life insurance company, then approval and premium paid and you’re on your way. Learn more about the process to obtain competitive life insurance.

Should I get insurance to pay off my mortgage if I die?
Getting life insurance to pay off major obligations in case of death is one of the most responsible and generous acts of love you can provide. Feel free to quote inexpensive term life or return of premium life insurance for the amount of your mortgage but also strongly consider getting coverage for the entire amount that is appropriate for you and your loved ones--not just enough to pay off your mortgage.

What other type of insurance is important?
Of course, one should have the appropriate amount of car insurance and homeowners insurance but there’s a type of insurance that’s often forgotten - disability insurance to protect your income. It’s a statistical fact that it’s more likely that one has a long term disability before age 65 than dying. You can learn about disability insurance, the best types of disability insurance and get quotes at www.protectyourincome.com .

What if I smoke cigarettes or use tobacco, does that affect my insurance rates?
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 rates. Contact us at 866 691 0100 so we can get the lowest possible rates that match your situation or email us. 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.

Does my weight affect my life insurance rate?
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.

Types of Life Insurance

Types of Insurance

Whole life insurance
Life insurance which has a guaranteed level premium for the rest of one’s life with no increases in premium, with a guaranteed cash value. There is participating whole life insurance usually issued by a mutual life insurance company where one participates as an owner of the company and there is non-participating whole life insurance issued by a stock life insurance company. To learn more about whole life insurance.

Term life Insurance
Term insurance is life insurance coverage for a specified period of time. This can be at a guaranteed rate or in some cases a guaranteed rate for a period of time and then a projected rate. Term periods can be for 1 year, 5 years, 10 years, 15, 20 and even 30 years. For example: 30 year level term would guarantee a level premium for 30 years based on a specified death benefit. Term life insurance is usually the least expensive form of life coverage, at least initially. After the initial term period of years, 5,10,15, 20, 30 etc. the policy could terminate or it can renew at a higher premium. If you are allowed to renew it at a higher premium (based on your then attained age), it is called renewable term life insurance. To learn more about term life insurance click here. For instant term life insurance quotes for you at your age without talking to an agent.

Universal life insurance
Universal life insurance is permanent life insurance with premiums that are not guaranteed. To a certain degree one can “design” a premium on this type of policy. Universal life insurance often can be set up with a lower premium initially than whole life insurance. Premiums and values are based on projections of assumed interest rates, the cost of insurance (also known as mortality cost) and the insurance company’s expenses. The actual premium paid may increase because interest rates may go lower or the projected cost of insurance may increase. For more information on universal life.

Which one is right for me?

This really depends on your situation. Contact a Life Insurance specialist today!

Life Insurance Definitions

Life Insurance Definitions

Application for insurance
This is the form on where you state information and answer questions from the insurance company about yourself and your history. This application along with information from a medical examination, if taken, from your physicians, any hospitals you may have visited and investigation are what’s used by the insurance company to decide whether or not to offer you life insurance and at what rate.

Beneficiary
The person(s) named in the policy to receive the life insurance proceeds upon the death of the insured.

Cash (Surrender) Value
The amount that is available in cash for loans and that may be available for withdrawals in a whole life insurance, universal life insurance or survivorship life insurance policy. Accessing Cash Surrender Value may reduce the death benefit and may increase the risk of lapse.

Contestability, Contestable Clause
In an insurance there is a clause which explains the conditions under which the insurer may contest or void the life insurance policy. This contestability is for a limited period of time which in most states is two years. After that period of time the insurance company can not contest the policy.

Convertible Term Insurance
Term insurance which can be exchanged (converted), at the option of the policyowner and without evidence of insurability, for a whole life insurance policy or universal life insurance policy.

Face Amount
The amount stated on the face of the policy that will be paid in case of death. It does not include additional amounts payable under accidental death or other special provisions, or acquired through the application of policy dividends.

Grace Period
Life insurance premiums are due on a certain date, if you are late in paying, policies allow a period of time where you can still pay your premium and not lose your polcy. This is the grace period. Most policies allow a grace period of 30 days from the due date. After the grace period, if the premium is not paid, the policy can lapse i.e. be terminated by the insurance company.

Insurability
Acceptability to the company of an applicant for insurance.

Insurable Interest
See owner of an insurance policy.

Insured or Insured Life
The person on whose life the policy is issued.

Key person life insurance
When one has a key person in a business without whom the business would suffer financially, key person life insurance is often purchased which helps to reimburse the company for the business loss incurred by the death of this person.

Level Premium (Life Insurance)
Life insurance for which the premium remains the same from year to year. The premium is normally more than the actual cost of protection during the earlier years of the policy and less than the actual cost in the later years. The building of a reserve is a natural result of level premiums. The payments in the early years, together with the interest that is to be earned, serves to balance out the underpayment of the later years.

Life Expectancy
The average number of years remaining for an individual to live shown at each age based on long term studies by insurance companies. These statistics as shown on charts called mortality tables..

Life Insurance
A contract between an owner (often the insured person) and a life insurance company that guarantees the payment of a stated amount of money on the death of the insured.

Loan (Policy Loan)
A loan made by a life insurance company from its general funds to a policy owner on the security of the cash value of a policy.

Mutual life insurance company
A life insurance company owned by the policyholders. Policyholders of a mutual life insurance company may participate in the “divisible surplus” of the life insurance company as owners. They can receive dividends, most commonly on whole life policies, which can enhance the cash value, increase the insurance amount or lower premiums.

Owner of a life insurance policy
A life insurance policy can be owned by the insured person or an individual, a company or a trust with an insurable interest in the insured person. Insurable interest means there would be a financial loss by the owner in the event of the death of the insured person.

Paid-up Insurance
Insurance that will remain in force with no need to pay additional premiums.

Participating Policy
A life insurance policy that is eligible for the payment of dividends by the insurer (see also Dividend.)

Permanent Life Insurance
Any form of life insurance except term; generally insurance that builds up a cash value, such as whole life. Universal life and whole life are types of permanent life insurance.

Policy Owner
The person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation.

Premiums
Payments to the insurance company to buy a policy and to keep it in force.

Renewable Term Insurance
Term insurance which can be renewed at the end of the term, at the option of the policy owner and without evidence of insurability, for a limited number of successive terms. The rates generally increase at each renewal as the age of the insured increases.

Return of premium life insurance
Also known as return of premium term life insurance, this is term life insurance for a period of time where one receives a guaranteed return of premiums paid if you keep the policy for the term period. For example, 20 year return of premium term would guarantee a return of premium paid after you paid 20 years of premium. Most of these policies also give a partial return of premium if you keep the policy for a great part of the years. For more information on return of premium life insurance.

Second to die life insurance
Life insurance that pays the benefit after two people die. See survivorship life insurance in this glossary.

Stock life insurance company
A stock life insurance company is owned by stockholders. Contrast this with mutual life insurance company.

Survivorship life insurance
Life insurance purchased on two individuals, usually man and wife, where the life insurance benefit is paid after both individuals have died. This type of life insurance became popular as a solution to paying estate taxes. The estate tax law allowed a couple to delay paying estate taxes until both had died. Thus, survivorship life insurance became popular as a less expensive way for heirs to pay estate taxes. The premiums are less than buying life insurance on one life. By paying premiums now the theory is that one can “pre-pay” the estate taxes because of the lump sum that comes in after the second death. For more information on survivorship life insurance.

Term life Insurance
Term insurance is life insurance coverage for a specified period of time. This can be at a guaranteed rate or in some cases a guaranteed rate for a period of time and then a projected rate. Term periods can be for 1 year, 5 years, 10 years, 15, 20 and even 30 years. For example: 30 year level term would guarantee a level premium for 30 years based on a specified death benefit. Term life insurance is usually the least expensive form of life coverage, at least initially. After the initial term period of years, 5,10,15, 20, 30 etc. the policy could terminate or it can renew at a higher premium. If you are allowed to renew it at a higher premium (based on your then attained age), it is called renewable term life insurance. To learn more about term life insurance click here. For instant term life insurance quotes for you at your age without talking to an agent.

Types of life insurance companies
See the definitions in the glossary for mutual life insurance company and stock life insurance company

Universal life insurance
Universal life insurance is permanent life insurance with premiums that are not guaranteed. To a certain degree one can “design” a premium on this type of policy. Universal life insurance often can be set up with a lower premium initially than whole life insurance. Premiums and values are based on projections of assumed interest rates, the cost of insurance (also known as mortality cost) and the insurance company’s expenses. The actual premium paid may increase because interest rates may go lower or the projected cost of insurance may increase. For more information on universal life.

Waiver of premium
This is an extra or add-in (called a rider in insurance lingo) that can be added to most individual life insurance policies which waives (allows you to stop paying) the payment after the insured person has been disabled (as described and defined in the insurance policy) for a specified period of time, usually six months. At that time, the six months premium paid along with future premium payments are waived.

Whole life insurance
Life insurance which has a guaranteed level premium for the rest of one’s life with no increases in premium, with a guaranteed cash value. There is participating whole life insurance usually issued by a mutual life insurance company where one participates as an owner of the company and there is non-participating whole life insurance issued by a stock life insurance company. To learn more about whole life insurance.