What type of life insurance do you need? How much coverage do you need? What is the process involved? What are your safeguards? We know that you have several questions related to term life insurance questions. We have constructed a list of term life insurance FAQs which should answer most of your questions and help you make an educated decision. In addition, we have added a few tips.
Q. How much life insurance do I need?
Life insurance experts suggest buying a life insurance policy that is 7 to 14 times your annual salary. However, your annual salary is not the only important factor to determe your life insurance needs. You also need to consider how much money your family will need to cover final expenses, current and future financial obligations such as home loans, other loans, educational expenses, living expenses, etc.
Q. Should my spouse have life insurance too?
There are many financial pressures on a family after the loss of either spouse. Beyond the obvious final expenses, the financial strain on a family after the loss of a spouse can be significant, even if the deceased spouse was not working. The surviving spouse will take time off work, or change jobs in order to spend more time with the children. Therefore, your overall financial plan should include life insurance for both spouses/parents.
Q. What are the benefits of inquiring online for life insurance and closing over the phone?
There are many good reasons to shop online for life insurance and close over the phone:
Convenience - You get the information and advice you need from the comfort of your own home at any time throughout the day.
Speed - The process of shopping online for life insurance usually takes no longer than fifteen minutes.
Savings - Online life insurance quoting and brokerage firms allow you to compare many quotes side-by-side, finding the best values in life insurance.
Experience - There's no substitute for experience. Online life insurance brokers talk to thousands of very different customers and the leading insurance companies all the time. They have the proven track record to help you and know the caveats of each life insurance company.
The value proposition is simple - Using the internet and the telephone as a tool to find and obtain the best values in life insurance saves time and money.
Q. How is SecureNow different from other firms?
There are many life insurance quoting and broking firms, but very few of them offer the same quality service that SecureNow provides.
Like many of our competitors, we provide low cost term life insurance quotes on the phone. These quotes represent the life insurance rates from the best life insurance companies in terms of price, features and service. What makes us unique is that unlike many of our competitors, we are NOT a quoting calculator. We provide our customers with faster than average policy delivery, Insurance advice and solutions for the whole family, and a commitment to provide our expertise throughout your lifetime
In addition, SecureNow offers an array of other personal lines insurance products that should be a part of every family's overall financial plan - Health Insurance, Personal Accident Insurance, Car Insurance.
Q. What factors increase my life insurance premiums?
Factors such as tobacco use, excess weight, poor general health, risky activities, like adventure sports, occupation and some pre-existing conditions could increase your life insurance premiums. However, if you are in overall good health, your life insurance rate should be very affordable.
Pre-existing diseases of certain kinds will adversely affect your premiums. Common conditions like allergies and asthma (depending on the severity) will usually not play a role in determining your life insurance rate.
Insurers will increase standard premium rates through a price loading if they detect any adverse factors. The extent of loading depends upon the severity of the condition. Insurers normally let customer know the reason why they are increasing prices.
Q. Can I get life insurance if I am a smoker or use tobacco?
Yes. However, smoker rates are much higher than non-smoker rates. In order to qualify for non-smoker rates, some life insurance companies require that you be smoke-free for at least one year; most require longer periods.
Q. When does my life insurance coverage begin?
Your coverage does not begin until your life insurance policy is approved and your first premium has been paid. The insurance act clearly states that the premium must be paid for the policy to be in force. If you are replacing existing coverage, you should never drop your existing coverage until your new policy has been approved, and your first premium has been paid.
Q. Is there a "free look" period?
Yes. If at any time during the application process you change your mind for any reason whatsoever, you will receive a refund (adjusted nominally for certain administrative costs and mortality charges), no questions asked. This "free look" period continues for 15 full days after your policy is delivered to you.
Q. Can I pay my premiums monthly, quarterly, semi-annually or annually?
Most insurance carriers offer several payment options, including monthly, quarterly, semi-annually and annually. By paying any other way than annually, you will be charged a higher rate. It also increases the burden on you. We strongly advise you to pay annual premiums. If you must pay more frequently then do go in for an automated ECS payment route so that payments are made automatically to the insurer.
Q. Can I get life insurance if I am in poor health?
Yes. You may have to pay a higher premium for your life insurance but you can certainly get some type of life insurance coverage. As a broker we advise you about which insurer is most likely to insure you at reasonable prices.
Q. Will my life insurance policy ever be cancelled because of health reasons?
No. Your life insurance policy will never be cancelled because of a change in your health, and you will not be asked to provide evidence of good health in order to renew your policy each year.
Q. How long does the life insurance application process take?
On average, the life insurance application process takes 3-8 weeks. However, there are varying factors that can speed up or slow down the process.
If you are applying for traditional term life insurance, you can decrease the amount of time it will take to get your policy in force by providing all the requirements on time. In addition, be sure to take the required medical exam as soon as possible to significantly reduce the application/underwriting process.
If you're interested in securing a policy even quicker, you may want to consider applying for a no medical exam life insurance.
Q. Why do I need to take a life insurance medical exam? What does it consist of?
In most cases a medical exam is required in order to qualify for a traditional term life insurance policy. It is conducted at the expense of the insurance company, at a time and place convenient for you.
The life insurance medical exam is usually conducted by a licensed paramedic or medical doctor, and generally involves a blood test, urine specimen, blood pressure reading, height and weight measurement, sometimes an ECG, and a series of questions about your health history and lifestyle. The whole process takes about 20-30 minutes.
Q. What happens during underwriting?
During this time, the life insurance company will evaluate your case. This evaluation is called "underwriting." The answers to the questions on your term life insurance application, along with the results of your life insurance medical exam, are initially reviewed by a life insurance underwriter.
The term life insurance underwriting process generally takes 3-8 weeks depending on the amount of information required for processing.
Once all required information has been received, the life insurance company will make their decision regarding whether, and at what rate, you qualify for a term life insurance policy.
Q. Should I replace my existing life insurance policy?
Shopping for a more affordable term life insurance policy is a good idea, especially if you bought your policy more than a few years ago. Prices have reduced dramatically. However, do your research before changing an existing term life insurance policy. Consider the following factors - Price, guarantee periods, Convertibility, Financial strength of the insurance companies and available riders.
Understand that when you buy a new term life insurance policy, a new contestability period starts (usually for the first two years).
DO NOT CANCEL any existing coverage until the new term life insurance policy has been approved, paid for, and delivered to you.
Q. What is return of premium term life insurance?
Return of premium term life insurance (ROP) is a type of life insurance policy that offers a guaranteed refund of the life insurance premiums at the end of the term period, assuming the insured is still living. This type of term life insurance policy is more expensive than traditional term life insurance. They offer cash values during the life of the policy.
In general we prefer customers to purchase regular premium term life rather than return of premium term as regular premium is far more cost efficient. However, if customers insist on return of premium products we'll offer that as well.
Q. I know I need life insurance, but cannot afford the coverage I need. Can I do anything to lower the cost?
Buy insurance as early as possible. Purchase term life as that gives the maximum leverage on premium paid.
Q. If I miss a premium payment, will I lose my insurance coverage?
If you pay the premium within the grace period following the due date, you will not be subject to a penalty or loss of coverage. This grace period is about 30 days in case of annual payment policies.
It may be a good idea to register for ECS payment on your policies. This will ensure that no payments are skipped out.
Q. What type of insurances should I as an individual have?
To ensure you are safe, the least you should do is to ensure that you have Health insurance, Life insurance, Accident Insurance, and Automobile insurance.
Q. Which type of policy is best suited for me?
The type of policy that suits you best depends on many factors, such as your insurance objectives, your income, assets, liabilities, number of dependent members in your family and family expense. Life insurance policies are broadly classified in to following broad categories
Term Life Policies (Pure Risk Policy)
Term Insurance is a
simple insurance plan that covers the life for a specific "term". Death
benefit is paid only if the person dies within this covered period.
Since its a no-frills product, it is also the cheapest amongst the Life
Insurance Products. A variant of this is Term Life with return of
premium. For the same coverage, the premiums are higher in this case. We strongly recommend term life insurance over all other forms of individual life insurance.
An endowment policy covers risk for a specified period, at the end of which the sum assured is paid back to the policyholder, along with the bonus accumulated during the term of the policy. There are several variants depending on how the premiums are invested on your behalf.
Q. Who is a Beneficiary?
The person(s) named in the policy to receive the life insurance proceeds upon the death of the insured.
Q. What is nomination?
Nomination is a right conferred on the life insurance policyholder to appoint a person or persons to receive the policy monies in the event of the policy becoming a claim by death. Any policyholder, who is a major and the life insured under a policy, can make a nomination.
A nominee is the person designated by the policyholder to receive the proceeds of an insurance policy, upon the death of the insured. You can change your nomination at any time till the maturity date. All you need to do is to inform the insurer about the change through the specified form.
The following details about the nominee are necessary when filling in the proposal form: full name of the nominee, address, age, and the relationship between you and the nominee.
Q. What is the difference between nomination and assignment?
While nomination is an authorization to receive the policy monies in the event of death of the life assured, it does not give the nominee an absolute right over the money received to the exclusion of other legal heirs. Further, the nomination can be revoked or cancelled at any time during the lifetime of the policyholder at his will by a subsequent assignment. Assignment of an insurance policy is different from nomination – it is a transfer or assignment of all rights and liabilities of the insurance policy in favor of the assignee.
Q. What are the advantages of Term Life Insurance?
Term life insurance provides pure life insurance in its most inexpensive form. Term life insurance provides coverage for a set period of time (the policy term) and generally pays a death benefit only if the insured dies during the policy term. The policy term typically ranges from 1 to 30 years, with 20 years being the most common term.
One of the biggest advantages of term life insurance is its lower initial cost in comparison to permanent life insurance. Term life insurance policies have no cash value accounts, policy loan provisions or other features typically found in permanent life insurance policies. With term life policies, you're generally just paying for the death benefit, which is the lump sum payment your beneficiaries will receive if you die during the term of the policy. With most permanent life policies, your premiums help fund the death benefit and can accumulate cash value.
Term life insurance is a good choice for people in their family-formation years, especially if they are on a tight budget. It allows an individual to buy high levels of coverage when the need for protection is often greatest. Term life insurance is also a good option for covering needs that will disappear in time. For instance, if paying for a child's education is an applicant's major financial goal, it would be wise for the applicant to purchase a term life insurance policy that will cover the period of time necessary to reach that goal.
Return of Premium (ROP) Term Life Insurance:
Return of Premium (ROP) term life insurance is a relatively new product that combines the advantages of traditional term life insurance such as affordable, guaranteed level premium periods (10, 20 or 30 years), with a return of premium feature. At the end of the level premium period, 100% of the premiums paid will be returned to the policy owner. There is a price to be paid for this added benefit. The premiums for ROP policies are higher than premiums for standard term life policies. The insurance company will generally invest these additional premium during the term of the policy, which allows them to return your premiums to you at the end of the term period.
Q. What are Age Limits?
Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew policies.
Q. What is an Application Form?
An application or proposal form is supplied by the insurance company and is usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. It is signed by the applicant and is part of the insurance policy if it is issued.
It is very important to disclose all relevant information in the application. In general greater disclosure is better than less.
Q. What is a Grace Period?
Policy holders are expected to pay premium on due dates. A period of 15-30 days is allowed as grace to make payment of premium.
Q. What are Exclusions?
These are specific conditions or circumstances for which the policy will not provide benefits.
Q. What is an Insurable Interest?
A condition in which the person applying for insurance and the person who is to receive the policy benefit will suffer an emotional or financial loss, if any untouched event occurs. Without insurable interest, an insurance contract is invalid.
Q. What is a Lapsed Policy?
A policy which has terminated and is no longer in force due to non-payment of the premium due.
Q. What is Misrepresentation?
Providing false information or withholding material facts in the insurance application.
Q. What is Reinstatement of a policy?
The restoration of a lapsed policy to in-force status. Reinstatement can only occur after the expiration of the grace period. The company may require evidence of insurability (and, if health status has changed, deny reinstatement), and will always require payment of the total amount of past due premium.
Q. Can I increase my life insurance coverage?
Usually, you can increase your coverage with a new policy or by adding a rider to your existing policy. However all coverage increases require you to provide evidence of insurability to your insurer.
Q. What are the definitions of "convertible" and "renewable"?
"Convertible" and "renewable" are provisions in a term insurance policy. With a convertible policy, the policy owner has the option to exchange the policy for another insurance plan without evidence of insurability. However, term policies can only be converted to cash value policies. With a renewable policy, the policy owner can renew (or extend) the policy at the end of its term without evidence of insurability. When a policy includes both provisions, they continue until specified ages and then stop. Premium rates increase at each renewal, based on the insured's age.
Q. Will my premium amount increase after I have bought a policy?
Typically, when you buy an insurance policy, it is a contract or an agreement that you are entering into with the insurance company. It is a fixed price (premium) that you are willing to pay in order to remain insured for the term of the policy. Thus, such a price (or the premium amount) is pre-fixed and the insurance company cannot increase the same later.
Q. How does my group life insurance policy differ from a personal life insurance policy?
Since group life is issued as a single master policy to an employer or association, as a plan participant, you have no control over the price or amount of coverage. If you leave the group, your coverage usually terminates.
Q. Will my family receive the insurance amount immediately after my death?
Usually the proceeds of the insurance policy are made available to the nominee in a period of 3 months; provided all the relevant paperwork has been done.
Q. Who would you like to insure?
Most life insurance companies offer a variety of products to suit your lifestyle and family. You can get a life insurance policy on your own life, or you can get one policy for both you and your spouse (called a joint life insurance policy). The most common joint life policy provides coverage when the first partner dies, leaving the life insurance benefit to the survivor.
Q. Why should you choose a broker you trust?
A life insurance broker is a dedicated person that encourages and listens to the needs and wants of a person looking for life insurance. It doesn’t matter what type of life insurance you are looking for, whole or term life. A broker will be able to find suitable rates for you to choose from. When you contact a life insurance broker, you can get the life insurance you need from a company in another city or state that you probably never even heard of
While it doesn't necessarily impact the type of policy you choose to purchase, a rapport with your broker is critical in feeling comfortable with the policy you buy and the information you've received. The same holds true for many other products including long-term care coverage and other investment products. That's why it is important for the broker you work with to also be able to offer you advice on a wide range of products.
The broker is familiar with the requirements of many different companies and knows which ones he/she can contact to get you the best rates on life insurance. It does not cost anything extra to use a broker for your life insurance needs and you do get lower rates than if you went searching on your own.
The broker will help you decide how much of a settlement your family would need in the event of your death and whether or not you need whole or term life insurance. Once those matters have been settled, the broker will then offer your needs to several different companies in order to get the best rates on life insurance.
You can search online for a broker just as easily as you can search for life insurance. Instead of having to contact three or four life insurance companies for quotes in order to get the best rates, let a broker do the work for you. It doesn’t cost you anything extra, since the broker derives his/ her fee from the insurance companies.