Life Insurance FAQs

What are the different types of life insurance and how do they work?

There are two main types of life insurance: Term and Permanent.

Term Life Insurance provides coverage for a set amount of time (a term), such as 10, 20, or 30 years. If the issured passes away during the stated term of the policy, their beneficiaries will receive the policy's death benefit.

Permanent Life Insurance, which includes Whole Life and Universal Life, provides lifetime coverage, so long as premiums are paid. Whole Life Insurance has a guaranteed death benefit and builds cash value over time, while Universal Life Insurance offers flexibility in premiums and the death benefit.

What is the difference between term life and Permanent life insurance?

Term life insurance provides coverage for a specific period and pays a death benefit only if the policyholder passes away during that term.

Whole life insurance offers coverage for the policyholder's lifetime so long as premiums are paid. Whole life also builds cash value over time, which can be borrowed against or used for various financial needs.

How does the life insurance application and approval process work?

The life insurance application and approval process typically involves several steps. Initially, the type and amount of coverage is chosen and application completed. Many policies require an applicant to undergo a medical exam where a healthcare professional checks the applicants vitals and reviews the medical history. After the exam, the insurance company will go through the underwriting process by reviewing the applicant's medical history and lifestyle factors to assess risk and determine the policy's premium. Once approved, the applicant will receive policy details and coverage will begin upon receipt of the initial premium.

How much life insurance coverage do I need?

The amount of life insurance coverage you need depends on your financial obligations, income, and financial goals. A common rule of thumb is to have coverage equal to 5 to 10 times your annual income. Factors such as mortgage payments, debts, daily living expenses, college tuition for your children, and financial security for your loved ones are crucial in determining coverage amounts.

You can use our Life Insurance Coverage Calculator to receive a personalized coverage amount recommendation.

Can I get life insurance if I have pre-existing health conditions?

Yes, you can get life insurance if you have pre-existing conditions, but your coverage options and rates depend on your condition. Mild conditions, such as high blood pressure or diabetes, may have little impact, while more serious conditions, such as heart disease or cancer, can make getting approved more difficult and raise premiums.

What happens if I stop paying my life insurance premiums?

If you stop paying your premiums, what happens next depends on the type of policy you have. With term life insurance, your coverage will lapse after the policy's stated grace period and you will no longer have protection. With a whole life or universal life policy, there are more options to keep your policy active. If a policy has built cash value, the insurer can use those funds to cover missed premium payments. These policies can also offer automatic premium loan provisions, which use the policy's cash value to temporarily pay premiums. However, if the policy's cash value runs out and premiums are still not paid, the policy will lapse.

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