Frequently Asked Questions
About Life Insurance
If we do not answer your questions about life insurance here, we invite you to contact us directly.
How do I determine how much life insurance I should buy?
Determining how much life insurance to buy is an important question with no right or wrong answer.
One of the main factors to consider is your income and how much will be lost after death. This is the main driver of how much life insurance to buy.
Each individual and family has different goals and needs. The proceeds of a life insurance policy can be used to help cover final expenses, financial obligations such as student loans or mortgages. It could also be used to help fund your children’s college or other benefits.
What is the maximum amount of coverage I can currently apply for?
The amount of coverage depends on your financial situation, including your income and net worth. The younger you are, the higher the multiple of your income you can qualify for in the life insurance coverage.
Who should be my life insurance beneficiary?
A life insurance beneficiary should be the person (or people) whom you are buying life insurance to help financially protect. It is the person who will receive the death benefit from a life insurance policy if you were to die. For example, your beneficiary can be a spouse or partner, children, or other family members or business partners that are important to you.
Is the death benefit taxable?
The life insurance death benefit payable to a beneficiary is usually tax-free.
How do the proceeds of a life insurance policy help those left behind?
Life insurance can help financially protect your loved ones in a variety of ways. The proceeds of a policy can be used to help:
- Replace lost income and cover living expenses, like rent or a mortgage, for your family
- Your family pay debts you may leave behind
- Provide for your kids’ care
- Cover burial, estate taxes, and other final expenses
- Fund college expenses for your children
- Cover unpaid medical bills or unpaid taxes
- Create an inheritance or to supplement your income in retirement, through a tax-free death benefit
What happens when your term insurance coverage term ends?
By definition, term life insurance coverage lasts for a specific period, usually 10, 15, 20 or 30 years. Typically, young families have a policy to protect them during the years when savings are low, and children are financially dependent. During that time, you can enjoy the peace of mind that comes with knowing your family has financial protection.
Once you’ve come to the end of your policy’s term, you have a few options.
- You can let coverage end because you no longer need a policy. The mortgage is paid off. The kids are adults. Enjoy the extra money in your bank account.
- You can renew the coverage, thanks to the fact that most policies have a guaranteed renewability clause in their contracts. But, coverage will cost much more per month, which is why it’s valuable (and cost-effective) to choose the right term length from the get-go.
- You can shop around to purchase a new policy if you still have a need for coverage.
What is the free look period?
Depending on what state you live in, by law, you have at least 10 days from when the policy is presented to decide if you want it. This is also known as the review period. Use this time to read through the contract, and if you would like to cancel for any reason, you can do so with a complete refund of premium. Refunds typically take 7-10 business days to process.
What is temporary coverage?
Temporary coverage is a feature that allows your life insurance coverage to begin while you complete a medical exam. In order for coverage to begin, we would draft a payment equal to a month’s premium for the coverage amount you are applying for. The coverage will be equal to the amount you are applying for up to $1,000,000.
The coverage will last either until you receive full coverage, you decide to cancel your application, or your application is declined. If you accept the policy, your temporary coverage payment will be applied toward your first month of full coverage; or if you do not accept or get declined, you will receive a full refund. Refunds typically take 7-10 business days to process.
It is critical that your payment is received in order to have temporary coverage. If your payment does not go through, then you were never covered—so make sure to enter correct banking information and have sufficient funds in the account.
What is a life insurance rider?
Life insurance riders are additional benefits that can be added to your policy so that it better suits your individual needs. Common riders include an accelerated death benefit, living benefits, waiver of premium, and convertibility. Riders may be available at an additional cost or may be included with the policy, or they may have fees when exercised. Certain conditions will apply to each rider.
What is the accelerated death benefit rider?
The rider allows a terminally ill person (with a diagnosis ranging from 12-24 months left to live) to collect a significant portion of their policy’s death benefit while still alive. The money is typically used to cover medical expenses, but can be used for any needs. The amount advanced plus interest is subtracted from the death benefit.
What is the waiver of premium?
A disability waiver of premium rider states that if the policyholder becomes totally disabled either from illness or injury, then the policyholder doesn’t have to pay premiums for the duration of the disability (if the disability lasts for longer than 6 months, the policyholder will receive a full refund from date of disability). Those who think they would be in danger of not being able to afford the premium if they were to become disabled may want to consider this option. Note: This rider is available with an additional monthly fee for applicants under the age of 50, in limited states (CA, DC, DE, FL, ND, NY, and SD).
What is a flat extra?
A flat extra is an additional cost added to the price of your policy. Flat extra ratings are most commonly assigned for risky activities and dangerous hobbies or occupations.
Can a flat extra be removed?
You may remove flat extras subject to approval.
As you are paying for a policy based on certain activities that are considered to be dangerous (and make your premium more expensive), if you are no longer participating in these activities for quite some time (typically one year), you can apply to have your case reviewed and the flat extra potentially removed.