FAQs for Life Insurance Comparisons

Life insurance offers a way to replace the loss of income that occurs when someone dies. It is a contract between you as the insured person and the company or "carrier" that is providing the insurance. If you die while the insurance contract is in force, the insurance company pays a specified sum of money free of income tax to the person or persons you name as beneficiaries.

A good life insurance program does more than just replace the loss of income that occurs if you die. It should also provide money to cover the new costs that arise after your death. And these cash benefits should provide for your family's future needs as well, including college education for your children or part of all of your spouse's retirement needs. In almost all cases, your life insurance policy beneficiary can use the cash benefits in the way he or she sees fit, without restriction. When you receive a life insurance quote, be sure to compare the benefits in addition to the lump sum payout.

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Life insurance is a unique asset that is a valuable addition to your overall estate due to its potentially high yield and tax-favored benefits. Life insurance can be used for any number of reasons. Some of the most common uses for term life insurance are:

• Creating an estate where time or other circumstances have kept the estate owner from accumulating sufficient assets to care for his or her loved ones. Term life insurance can create an instant estate.
• Paying estate taxes and other estate settlement costs. These costs can vary from a low percentage of 3% to 4% percent to over 50% of the estate. Federal estate taxes are due nine months after death.
• Funding a business transfer. Business owners often agree to buy a deceased owner's share from his or her estate after death. Term life insurance provides the ready cash to finance the transaction.
• Funding college for children or grandchildren. Cash value increases, in a policy on a minor's life or the parent's life, can be used to accumulate funds for college.
• Paying off the home mortgage. Many people would like to pass the family residence to their spouse or children free of any mortgage. Often a decreasing term life insurance policy is used, which decreases in face amount as the mortgage balance is paid down.
• Protecting a business from the loss of a key employee. Key employees are difficult to attract and retain. Their untimely death may cause a severe financial strain on the business.
• Creating a retirement fund. Current life insurance products provide competitive returns and are a prudent way of accumulating necessary funds for retirement years.
• Replacing a charitable gift. Charitable remainder trusts provide tax benefits and life insurance can replace the value of the donated asset. Policies can also be paid directly to a charity.
• Guaranteeing loans. Personal or business loans can be paid off with life insurance proceeds.
• Equalizing inheritances. When the family business passes to children who are active in it, life insurance can give an equal amount to the other children.

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Generally speaking, the amount of life insurance that an individual should consider purchasing should be between six and eight times his or her annual earnings. However, there are many factors that should be taken into account when calculating this figure. For example, income sources and amounts other than salary earnings, whether or not the individual is married and, if so, what the spouse's earning capacity amounts to, the number of individuals who are financially dependent on the insured, the amount of death benefits payable from Social Security and from an employer-sponsored life insurance plan, whether any special life insurance needs exist, and so on, are some things to be considered in determining a more precise estimate.

How do I obtain life insurance? Can someone help me select the right term life insurance for me? Top of Page

Once you decide which plan is right for you, call us or apply online and receive online insurance quotes instantly. One of our representatives will contact you to arrange completion of all required insurance company forms. If a medical exam is needed, the representative will arrange it at a time and place that is convenient for you. We will handle all the details to obtain your term life insurance coverage as quickly as possible. Once you have been approved, your policy will be delivered to you for inspection. State consumer laws require a "free-look" period so you can do a life insurance comparison if you wish. If you change your mind, you may return your term life insurance policy and receive a full refund from the insurance company within a specified period of time.

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Some experts embrace the idea that you should "buy term life insurance and invest the rest." Buying term life insurance may allow you to secure the life insurance coverage you need, while giving you the latitude to invest the rest of your money in more high-yield venues like stocks and bonds. When you perform a life insurance comparison, be sure to note whether you're comparing permanent or term life insurance.

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If your life insurance policy is renewable beyond the guarantee period, it will contain a provision for what your maximum renewable premium will be. In many policies there is also an illustrated premium, which is what the insurance company "projects" the future premium to be (this is lower than the guaranteed maximum premium). The projected life insurance renewal premium is not guaranteed and can be higher or lower than what is shown but never higher than the guaranteed maximum premium.

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You are guaranteed the right to convert your term life insurance policy to permanent life insurance without evidence of insurability.

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The length of time varies, but with most life insurance companies you would have to quit smoking for 12 to 24 months to be considered for nonsmoker rates. There can be as much as a 30% to 50% savings going from smoker to nonsmoker rates. Be sure to consider this difference when performing life insurance comparisons.

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Most life insurance companies consider cigar or pipe smoking the same as cigarette smoking, with premium rates 30% to 50% higher than nonsmoker rates. A few of the top-rated life insurance companies disagree, offering nonsmoker rates to cigar or pipe smokers.

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There are several criteria:

1. No tobacco or nicotine usage of any kind in the last 3 years
2. No history of, or current treatment for, high blood pressure, cancer, diabetes, mental or nervous disorders, or disorders of the heart, lungs, liver, or kidneys
3. No incidence, prior to age 60, of cardiovascular disease in immediate family (parents, siblings)
4. All values should be favorable, including cholesterol, triglycerides, and lipids
5. No abnormal findings in urinalysis; presence of nicotine may disqualify you for preferred class
6. Height and weight must comply with established underwriting guidelines
7. No convictions for reckless driving or driving under the influence of alcohol or drugs in the past 5 years
8. No participation in hazardous activities or avocations that require rating
9. Private pilots may be preferred but may have flat extra premium or exclusion
10. No residence outside U.S. or Canada

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Most life insurance companies now offer a preferred plus class, for the person in better than average health. The preferred plus class is more difficult to qualify for than the regular preferred, only about 15% to 20% applying qualify for these life insurance rates. If you think you'll meet this qualification, be sure to check that your insurance company offers preferred plus when you do your life insurance comparison.

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You can either buy a separate life insurance policy for your child(ren) or purchase a child rider that will allow you to cover your child(ren) on your policy. The availability and acceptance of children as a rider varies by company. When you request a life insurance quote and an application you can indicate your desire for such life insurance coverage and we will advise you as to the availability and/or exclusions and cost.

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Yes. You can have a permanent life insurance policy and add a supplemental term life insurance policy for a short-term need, for example. If you request more insurance coverage than your expenses indicate you need, the insurance company will want proof that a medical condition is not motivating your request.

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If a policy lapses, most companies allow you a grace period in which to pay your premium and continue the life insurance policy. If you have enough cash value built up in your policy, most companies will use part of the cash values to pay the premium due. If you have a term life insurance policy and don't pay within the grace period, your policy will lapse and simply end.

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The first step is to request a life insurance quote, which you can do in the form of an online insurance quote if you wish. If you are happy with this life insurance quote, you can then request an application.

Life Insurance Application: An application will be mailed to you for your review and/or completion and signature (if for some reason we cannot facilitate your application you will be notified immediately). We will provide you with a postage-paid envelope in which to return your completed application.

Medical Exam: You will be contacted to set a time for a medical exam. The exam normally takes place at your home but can also be scheduled at the examiner's office or your work. The exam takes about 30 minutes and generally consists of a height and weight measurement, blood pressure reading and blood and urine sample. If you request, results of the exam will be provided to you.

Underwriting: After your application and medical results are received by the insurance company, underwriting will begin. Underwriting is the term used to describe the process the insurance company undertakes to determine whether or not you are approved for life insurance coverage. During this process, the company will review additional information and/or request medical records from your doctor. The normal underwriting time is 4-8 weeks.

Decision: After your exam results and application are reviewed by the insurance company, we will notify you as to whether or not you were approved for coverage. There are three scenarios that can occur at the decision stage:

• Your application is approved at the same rate class as was requested. In this case your policy will automatically be mailed to you.
• Your application is approved at a higher rate than what was quoted. For example, you applied for Preferred but your cholesterol was elevated on the health exam and the insurance company approves you at Standard. In this case we will notify you that your application was approved at a higher rate and ask whether or not you are still interested in coverage. If you are, your policy will be mailed.
• Your application for life insurance coverage is denied. If your application is approved at a higher rate than you applied or if your application was denied, you will be provided the reason(s).

Coverage: Once you receive your policy, satisfy any outstanding requirements, and pay your first premium (if you did not elect temporary coverage if it was available), your policy will go into effect and your coverage will begin!

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The most time-consuming portion of the application process involves the satisfaction of medical requirements. Medical requirements vary by insurance company, by applicant age, and by amount of insurance purchased. The insurance company needs all the required information before the underwriting process can begin. Whether it is the completion of a brief paramedical exam or requiring medical information from your doctor, your assistance in ensuring that these requirements are satisfied will dramatically affect the processing of your application.

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No. We do not require you to send money with the application. However, many life insurance companies will provide you with limited temporary coverage while your application is being reviewed if you remit the first premium payment with your application. In some instances, temporary life insurance coverage is not allowed. When you request an application, we will notify you if temporary coverage is an option.

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For individual life purchases, you will be classified based on height, weight, nicotine use, and other health factors. Your health status will determine what rate class category you fit in, so even if you have some health problems, you could be covered. There is no public list of factors available; however, your agent should explain what criteria determine the class into which you fall.

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You can pay your life insurance premiums annually, semiannually, quarterly, or in monthly payments. Many companies also allow you to have your premium automatically deducted from your bank account or charged to your credit card.

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A.M. Best is perhaps the oldest and most recognized company rating life insurance companies for financial strength and solvency. Companies rated A++ and A+ are considered "Superior" companies and companies rated A and A- are considered "Excellent" companies.

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Most people tend to designate a spouse or family member as their beneficiaries. Regardless the designation, however, an underwriter must evaluate any life insurance policy's designated beneficiaries to determine insurable interest before the policy is issued. Insurable interest is a term that refers to an individual's (or group of individuals') connection to the insured. Clearly, family members have the most obvious insurable interest in an insured, however, life insurance policies can benefit a company - in the case of a company president, co-owner, or principal shareholder - but they can also benefit a trust, which is typically the case when underage children are involved, or when an insured wishes to leave the policy's death benefit to a charity or organization.