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Life Insurance FAQs


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Wondering what type of policy you need, how much, and for what length of time the coverage is necessary? You are not the only one who has asked these life insurance questions. That is why we have developed this FAQ section. Read through our questions and answers to help you make an educated decision when it comes to purchasing a life insurance policy.



Basics of Life Insurance

1. What type of life insurance should I buy?

Life insurance comes in many shapes and sizes, but the different types of life insurance policies generally fall into two categories: term life insurance and permanent life insurance.

The type of life insurance you should buy depends on your personal situation and financial goals.

Learn more about the types of life insurance.

Life insurance experts suggest buying a life insurance policy that is 10 to 20 times your annual salary, but your annual salary isn't the only important factor in determining your life insurance needs. You also need to consider how much money your family will need to cover final expenses, and current and future financial obligations, such as the mortgage, college tuition, etc.

Use our life insurance needs calculator to get a better estimate on how much life insurance you need.

Financial rating companies such as A.M. Best, Standard & Poor's, Moody's and Fitch, regularly evaluate the long-term financial strength of life insurance companies across the country. These financial rating companies review each life insurance company's financial balance sheets, business profiles and overall operating performance. The ultimate goal is to determine whether a life insurance company is in a secure financial situation or a vulnerable one.

A life insurance company in a secure financial situation will have a better rating. Alternatively, a life insurance company in a vulnerable financial situation has a higher risk of defaulting on its payout obligations; leaving your loved ones unprotected.

The rating system is simple. Financial rating companies appoint letter grades to each life insurance company based in its individual financial situation and performance level; similar to how grades are distributed in schools. For example, the best life insurance companies have an A+ rating and the more vulnerable ones have a rating below a B+.

AccuQuote only represents the top one percent of life insurance companies with ratings of A- or better.

Temporary life insurance provides you with coverage during the life insurance application/underwriting process. Most life insurance companies give you the option of obtaining temporary coverage by remitting the first month's premium payment with your application. This will ensure that your loved ones are financially protected if you die before your policy is issued.

Keep in mind that obtaining temporary life insurance coverage is not a requirement by life insurance companies, but highly recommended.

Also, you're guaranteed a full refund of your first premium payment up to 10 days after receiving you term life insurance policy. So, there's nothing risky about opting for temporary coverage. It may be a bigger risk not to get it.

Most families have coverage on both husband and wife. There are many financial pressures on a family after the loss of either parent. 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 wasn't working.

Often 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.

We know how difficult of a time a family member's death can be. Our promise to you is that we will be there every step of the way if you should ever have to collect on your loved one's life insurance policy.

We encourage you to reach out to us. We will help:

  • Explain the claims process.
  • Provide carrier contact information for filing a claim.
  • Offer guidance on proceed distribution options.
  • Create a lifetime income stream from the death benefit, designed to protect present and future needs.

In addition, we have prepared a very useful checklist of things that need to be done when someone dies to help make the process as smooth and hassle free as possible. Take the time to read through it now so that you are prepared if the time ever comes to file a death claim. You may also want to print it and place it with your life insurance policy. Read our life insurance checklist.

Statistics prove that people are living longer, healthier lives due to the advances in medical care. This means that the need to charge high rates is simply unnecessary because the risk is much lower.

In addition, the health criteria to qualify for traditional term life insurance is much stricter than it used to be. Depending on the type of policy, many life insurance companies require a medical exam. The medical exam allows underwriters to obtain better information about your health and lifestyle. The healthier you are, the lower your term life insurance rate. Here are some life insurance exam tips.

The internet has also had a huge impact on life insurance rates. It has allowed consumers to easily find the lowest rate which has had an impact on competition, forcing life insurance carriers to remain competitive in pricing

There are many life insurance quoting and brokerage firms out there, but none of them offer the same quality service that AccuQuote provides.

Like our competitors, we provide low cost term life insurance quotes online. These quotes represent the life insurance rates from the top one percent of life insurance carriers.

What makes us unique is that unlike our competitors, we are NOT a one and done quoting calculator. We provide our customers with:

  • Extraordinary, personalized customer service. Just ask our hundreds of thousands of customers.
  • Faster than average policy delivery
  • Insurance advice and solutions for the whole family
  • A commitment to provide our expertise throughout your lifetime

In addition, AccuQuote offers an array of other financial products that should be a part of every family's overall financial plan. Learn more about AccuQuote's products and services.

 

There are four great reasons to shop online for life insurance.

  1. Convenience - Shopping for life insurance has never been more convenient. You get the information and advice you need from the comfort of your own home at any time throughout the day.

  2. Speed - The process of shopping online for life insurance usually takes no longer than five minutes. After briefly talking to a licensed life insurance, like the ones at AccuQuote, a personalized life insurance quote is generated and the application process begins.

  3. Savings - Online life insurance quoting and brokerage firms allow you to compare dozens of quotes side-by-side, finding the best values in life insurance.

  4. Experience - There's no substitute for experience. Online life insurance agents talk to thousands of very different customers every year. They have the proven track record to help you and know the caveats of each life insurance carrier.

The bottom line is simple. Using the internet as a tool to find and obtain the best values in life insurance saves time and money.

Health and Lifestyle

A life insurance rate class is a category that describes certain health and lifestyle factors. Your life insurance rate is determined by the rate class you fall into. The best rate class charges the lowest rates.

Here are the most common rate classes.

  • Preferred Plus - In order to qualify for preferred plus rates you cannot use any tobacco and you must be in overall excellent health with no history of drug or alcohol abuse. In addition, you must not engage in hazardous activities.

  • Preferred - Generally, to qualify for preferred rates you must be in excellent overall health and you must not participate in any hazardous activities.

  • Standard - Standard risks refer to people who have had some minor health impairments. Examples of someone that would qualify for standard rates would include people who have elevated cholesterol levels or who are overweight.

  • Substandard - This rate class encompasses people that have more than minor health problems. An additional charge will be added to these people's premiums depending on the risk factors involved.
Keep in mind that underwriting guidelines vary among life insurance companies.

Factors such as tobacco use, high cholesterol, risky activities, like skydiving or bungee jumping and some pre-existing conditions will likely have a negative impact on your life insurance rate.

Alternatively, if you're in overall excellent health, your life insurance rate should be very affordable.

Common conditions like allergies and asthma (depending on the severity) will usually not play a role in determining your life insurance rate.

Yes. But keep in mind that smoker rates are much higher than non-smoker rates. However, some life insurance companies won't charge extra if you only use chewing tobacco occasionally.

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

Yes. You may have to pay a higher premium for your life insurance but you can certainly get some type of life insurance coverage. If some reason, because of a severe medical condition, you cannot qualify for traditional term life insurance, you can apply for a type of life insurance that requires no medical exam. Lean more about no medical exam life insurance. In addition, we offer final expense insurance and accidental death insurance.

You must have your green card and have been a permanent resident for at least a year in order for most life insurance companies to provide you with coverage. We cannot provide life insurance quotes or coverage for temporary residents, including anyone with a work permit or visa, permanent residents without their green card, or green card applicants who have not yet received their green card.

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.

Life Insurance Process

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.

Can I speed up the life insurance 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 returning all of the delivery 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 more quickly, you may want to consider applying for a no medical exam life insurance.

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; usually right in your home.

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 EKG, and a series of questions about your health history and lifestyle. The whole process takes about 20-30 minutes.

Follow these life insurance exam tips in order to qualify for the best rate possible. Remember, the healthier you are, the cheaper your term life insurance rate.

During this time, the life insurance company will begin to 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.

Your coverage does not begin until your life insurance policy is approved and your first premium has been paid. Most companies provide some temporary coverage during the application/underwriting process (assuming certain conditions are met).

Temporary life insurance provides you with coverage during the life insurance application/underwriting process. Most life insurance companies give you the option of obtaining temporary coverage by remitting the first month's premium payment with your application. This will ensure that your loved ones are financially protected if you die before your policy is issued.

Important! 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.

 

Yes. If at any time during the application process you change your mind for any reason whatsoever, you will receive a full refund, no questions asked. This "free look" period continues for 10 full days after your policy is delivered to you.

 

The reality is if you're thinking about obtaining a life insurance policy, you probably need it now.

Remitting the first premium along with your life insurance application will provide temporary life insurance coverage during the life insurance application/underwriting process. We strongly encourage you to obtain this temporary coverage, especially if someone is financially dependent on you (i.e. your spouse, children, etc.). It is, however, not required.

Unfortunately, there have been situations where customers have died before their life insurance policy was issued. If money is not remitted with the application, benefits cannot be paid if an untimely death occurs during the life insurance application/underwriting process. We take the issue of life insurance coverage very seriously and seek to protect our clients as soon as possible.

Remember, you are guaranteed a full refund for up to 10 days after the life insurance policy is delivered to you, so there is no risk in submitting money with an application. The real risk may be not submitting money.

 

Most term life insurance policies offer an optional feature called waiver of premium. This typically states that in the event you become totally disabled for a period of six months or longer, the insurance company will pay your term life insurance premium until you are no longer disabled. This feature is optional (available at an extra cost) and must be chosen at the time of your term life insurance application.

Learn more about waiver of premium term life insurance.

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 interest. This is called the APR (annual percentage rate). The APR varies from company to company, however most companies do not disclose the amount.

To make things easy, we provide an easy-to-use APR calculator. Simply plug in the numbers and you'll have the information you need to intelligently determine whether the additional cost of paying in installments makes sense for you.

Keep in mind, paying premiums annually can save you thousands of dollars over the life of your policy.

Yes. Many life insurance companies offer an electronic life insurance application process called e-signature.

E-signature is a technology that allows you to apply for insurance coverage through an electronic transaction. This includes the use of electronic records and electronic signatures. This paperless process provides a much faster turn-a-round time (10 to 15 days on average) and easy-to-follow application steps. The result is an error free application that significantly improves your experience.

Keep in mind, not all life insurance companies offer this application process, but many of the carriers we represent do. When available, we highly encourage our customers to use it.

For more information about e-signature and its availability, call AccuQuote at 800-442-9899.

 

Products and Services

Insuring your child is by far one of the easiest and most affordable ways to establish their financial foundation and future insurability while they're still young and healthy. These policies offer up to $30,000 in life insurance coverage for children and young adults, and cost as low as $1 for the first month's premium.

No medical exam is required. Just answer yes/no to a few medical questions and you can buy a policy over the phone, hassle-free! Once the application is approved, coverage starts right away!

The coverage is guaranteed for life, regardless of future changes in age, health or occupation as long as premiums are paid on time.

Since your children's coverage is a whole life insurance policy, it builds cash value that could be used for future expenses, including education, a down payment on a home or even to pay future premiums. Learn more about child life insurance.

A life insurance policy review is an assessment of your current financial needs. At AccuQuote, we'll review the terms of your existing policy and determine if you need more or less coverage if major life events have occurred since you first purchased your policy.

Here are some reasons you should consider a life insurance policy review.

  • You want to make sure your family is adequately protected
  • You wonder if you can find a more affordable life insurance rate
  • You would like to see a term vs. permanent life insurance comparison
  • Your health has changed for the better, or worse
  • You would like to learn more about exercising the conversion option that may be available on your existing term life insurance policy

Contact AccuQuote today for a free life insurance policy review at 800-442-9899.

 

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 because rates have fallen dramatically. However, be careful. Before replacing an existing term life insurance policy make sure you closely compare your existing term life insurance policy with the one you're thinking of replacing it with. Consider the following factors:

  • Price
  • Guarantee periods
  • Convertibility
  • Financial strength of the insurance companies
  • Available riders

Understand that when you buy a new term life insurance policy, a new contestability period starts (usually for the first two years). You should also be aware that suicide is not covered under a new contract (usually for the first two years).

Important! DO NOT CANCEL any existing coverage until the new term life insurance policy has been approved, paid for, and delivered to you.

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 a bit more expensive than traditional term life insurance, but the premiums are designed to remain level. They are often significantly less expensive than permanent types of life insurance, yet, like many permanent policies, they still may offer cash surrender values if the insured doesn't die. Return of premium term life insurance policies are available in 15, 20, or 30-year terms.

Learn more about return of premium term life insurance.

A life insurance rider, also known as an endorsement, is an addition to a life insurance policy that usually expands or limits the benefits payable under the contract. Life insurance riders allow you to have more flexibility and personalization in your life insurance policy.

Learn more about the different types of life insurance riders.