Frequently Asked Questions

Common Life Insurance Questions

Let’s answer some common questions about life insurance.

What Is Life Insurance? 

Life insurance is a promise of financial security. It’s a contract where the insurer pledges to pay a designated beneficiary a sum of money in exchange for a premium, upon the policyholder's passing. Depending on the terms, it can also cover events like terminal or critical illness. Whether you choose to pay premiums regularly or as a lump sum, life insurance can ease the burden of unexpected expenses, including funeral costs. 

Do I really need life insurance?

Do I want to leave a legacy for my children, grandchildren, other family members, church, or another non-profit? To evaluate this, ask yourself: Is anyone relying on my income to maintain their standard of living?” If something were to happen to you, would your loved ones struggle to cover expenses like burial costs, rent or mortgage payments, and other bills? What about any outstanding medical expenses? Would they have enough to continue living comfortably?

How do I buy life insurance? 

Always ensure you’re working with a licensed and well-reviewed insurance agent or company. Once you’ve found one you trust, follow these steps:

1. Evaluate  Your Needs: Determine how much coverage you need, for how long, and what you can afford to pay.
2. Consult  with Your Agent: Discuss your specific needs and financial situation      with your agent to get personalized recommendations.
3. Review Your Options: Look at the various policies available to you, comparing      their benefits, premiums, and terms.
4. Make an Informed Decision: Choose the policy that best suits your needs and  budget.

What is the “free to look” period?

If you've recently purchased a life insurance policy and have second thoughts, let your agent know immediately. You might be in your “free look” period, which gives you at least 10 days from the policy's delivery date to review and decide. For policies sold by mail, this period extends to 30 days. If you choose to return the policy during this time, the insurer must refund any premiums you paid.

what is a guaranteed issue life insurance policy?

Is A guaranteed issue life insurance policy is a type of life insurance that does not require a medical exam or health questions for approval. It is designed for individuals who may have difficulty obtaining traditional life insurance due to health issues. Coverage is typically limited, and premiums may be higher, but it ensures that everyone, regardless of health, can secure a policy.it true that some companies won’t turn applicants down?

What’s the difference between term and permanent life insurance?

Term insurance generally has lower premiums than permanent policies. However, term life insurance does not build up cash value that you can use in the future. Term covers you – as the name suggests – for a term of one or more years. If you die within that term, death benefits are paid out. You can renew most term insurance policies for one or more terms, even if your health has changed, though premiums may be higher. So be sure to ask your insurance agent or company if you will have this option to renew after the end of the term and if there is an age cut-off for renewals. You may also combine cash value life insurance with term insurance for the period of your greatest need for life Insurance to replace Income. 

Permanent insurance policies remain in place as long as the premium is being paid. They also all have a cash value that increases over time and allows the policyholder to borrow against that cash value. Because of the savings element, the premiums for permanent insurance tend to be higher compared to term insurance premiums. Permanent life insurance: whole life, and universal life.

What is an IUL Index universal life? 

An Indexed Universal Life (IUL) insurance policy is a type of permanent life insurance that combines a death benefit with a cash value component. The cash value can earn interest based on the performance of a stock market index, such as the S&P 500, while offering a level of protection against market downturns. It provides flexibility in premiums and death benefits, making it a versatile option for long-term financial planning.

What is mortgage Protection?

Mortgage protection insurance  is designed to safeguard your home by ensuring your mortgage payments are covered in the event of your death, disability, or job loss. This policy provides peace of mind by protecting your family from financial strain and helping to prevent foreclosure during difficult times. It's an important safety net to maintain your home's security and stability.

What does “fully paid up” mean on a permanent life insurance policy?

When a permanent life insurance policy is “fully paid up,” it means that all the required premiums have been paid, and no further payments are needed to keep the policy active. The policy remains in force for the rest of the insured’s life, and the death benefit will be paid to the beneficiaries when the insured passes away. Essentially, it ensures that the coverage is maintained without the need for any additional premium payments.

How does Cash Value Work in a life insurance policy?

Cash value in a life insurance policy is a savings component that grows tax-deferred over time. It’s available in permanent life insurance policies, such as whole and universal life. Part of your premium payments go into this cash value account, which can be accessed through loans, withdrawals, or used to pay premiums. The cash value grows based on the policy’s terms and the insurance company's investment performance.

How can you use the cash value in your insurance Policy?

1. Borrow  Against It: Take out a loan using the cash value as collateral.
2. Make  Withdrawals: Withdraw funds directly from the cash value.
3. Pay Premiums: Use it to cover your policy premiums.
4. Surrender  the Policy: Cancel the policy and receive the accumulated cash value     (minus any fees).

What is long term care?

A long-term care policy is an insurance policy that helps cover the cost of care for individuals who have a chronic illness, disability, or other conditions that require extended care. This care can include assistance with daily activities such as bathing, dressing, and eating, either at home, in a nursing home, or an assisted living facility. It provides financial support for services that are not typically covered by regular health insurance or Medicare.