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Life Insurance Frequently Asked Questions
The Hinerman Group knows how frustrating and confusing shopping for term life insurance can be. When you add in complications and life events it can feel impossible. The Hinerman Group offers our life insurance FAQs to walk you through every step of term life insurance rates & policies and ensure that you get the information you deserve.
If you’re really healthy you can get up to $2.5 million of life insurance approved in just a few days after a phone interview, sometimes within just a few hours. Several companies have figured out that, in the absence of significant health issues, they can rely on the huge amount of online data that we all have now to make quick decisions. If you have health issues that would make it prudent for an underwriter to review your medical records, then it can take from a few weeks to a few months. Most of that additional time is spent just getting your doctor to send the records. Want to know more about your options?
You can get accidental death and dismemberment insurance that does cover acts of war and terrorism but does not cover natural causes of death. We can have this issued and in force within a few days of your inquiry. You can apply whether you’re still here in the US or already working overseas and everything is handled electronically so it’s fast. You won’t be able to get life insurance that covers natural causes of death until you are done with your overseas employment. Want to find out more?
Yes it is. If your policy is for $500,000, your beneficiary will receive $500,000 upon your death and there is no income tax due on that amount. There is only one way to mess up that tax free status. Business owners are famous for wanting to deduct every penny paid out, but the IRS says if you deduct the premium paid as a business expense, the policy will lose its’ tax free status. Want to know more?
Rates can change due to lab results that neither you nor the agent were aware of. Rates can change if you forgot to include some medical information on the application. Probably the most common reason for the rate to be different is because the agent didn’t ask all the health questions and/or didn’t know the underwriting guidelines of the company and quoted you something you didn’t qualify for, at least with that company. If your rate came back higher than you expected, a second opinion from a different agent should help. Never accept a higher rate without a second opinion. Want more information?
The answer is yes. AIG Direct is a good example. Cutting out the middle person (the agent) doesn’t lower your cost and can mean you aren’t finding the best rate. Life insurance prices are approved by the national association of insurance commissioners (NAIC) and are set so that agents, agencies and companies all charge the same rate. There are only a few companies that allow direct applications and the reason for that is that agents can provide ongoing service for a customer that life insurance companies don’t want to take on.
We only quote and illustrate companies that are A Excellent to A++ Superior rated by AM Best. While we represent many companies you have probably heard of, such as Prudential Financial, Lincoln Financial and Mass Mutual, we may quote companies that you’ve never heard. Companies like Banner, Cincinatti Life and Minnesota Life are equally or higher rated than Prudential. They have simply chosen to put their money into low rates and great underwriting versus advertising.
No! There are companies that will issue policies without exams. Some will issue up to $2.5 million without an exam. It’s worth noting that even though you can skip the exam, they will still retain the right to review your medical records and today they have access to databases that provide information even you may have forgotten. Having said that, if you are exceptionally healthy and want it quick and easy, prices can be comparable to fully underwritten policies.
That’s called a life settlement. If you no longer need your life insurance policy, and it can still be converted to a permanent policy, there is a chance it can be sold. While that sounds quick and easy it’s important to understand that for a life settlement company it’s an investment. If you’re still very healthy it usually isn’t a good investment. You should also carefully weigh the cost of selling a policy versus keeping it if you’re in poor health.
If you have been declined there is a good chance it was because you chose the wrong agent who chose the wrong company. It is not unusual for one company’s decline to be another company’s approval at an affordable rate. Being declined happens far more often than it should, so choose an experienced agent that not only knows the right company to choose, but can show you why they recommended the company they did. Don’t be shy about asking your agent to prove they are making the right recommendation.
There are policies called “guarantee issue life insurance” where there is usually a two year period in which no death benefit is paid if you die, except if the death is due to an accident. With a guarantee issue policy, if you die during the first 2 years the company will return all of the premiums paid, plus 8-10% interest. After the two years they would pay the full death benefit for any cause of death.
With traditional term or permanent life insurance the answer we use around the office is “no, as long as you tell the truth and don’t do yourself in”. Every traditional policy has a 2 year suicide and contestability period. During the first two years the company doesn’t have to pay if the death is due to suicide or due to something that was misrepresented on the application. If you are completely honest on the application and don’t do yourself in, the policy is fully in force from the date the first premium is paid until you quit paying premiums.
The answer is nothing. Any company or agency that requires money with the application is simply using a psychological ploy to make you feel more committed to them than you need to be. Don’t pay for anything until you have a policy in your hand and you are sure it’s what you want to put in force. We believe in showing you that we can come through for you before you pay a dime, and then it goes to the insurance company, not Hinerman Group.
The quick answer is NO. You can choose to pay annually, semi annually, quarterly or monthly, monthly being done by automatic bank draft. Those are called payment modes. Annually is the least expensive, but the most important choice is what works with your budget. When you start the application process you don’t have to commit to how you will be paying once the policy is in force. Once the application is approved you can decide which mode will work best for your budget.
A term life insurance policy guarantees a level premium and a level death benefit for a set number of years, “the term”. The most common term lengths are 10, 15, 20 and 30 years. In the last few years a few companies have added 25, 35 and 40 years. The advantages of term insurance are a low price compared to universal or whole life and the ability to tailor your insurance to how long your actual need should last. Need more information?
Get a second opinion from a different life insurance agent. Life insurance companies vary widely in how they perceive and accept risk. It is not unheard of for one company to decline a person and that same person be approved by another company at a great rate. In order to seek and find that approval you need to get a clear answer about why you were declined and be prepared to provide whatever medical information is needed for the new agent to successfully help you. Need more details?
A permanent life insurance policy, simply put is a policy that you cannot outlive. If you have a need for a policy that you can’t outlive, I strongly recommend that you make sure that it is guaranteed to be permanent without any increase in premium, ever. There are policies that are sold as permanent but aren’t guaranteed and those can require premium increases if certain parts of the policy don’t perform well. Permanent life insurance will always come with an illustration that will clearly show if it is guaranteed or not. Need more details?
It may take a little effort, but my best advice is “Buyer Beware”. Every insurance agency and every life insurance agent have an agenda in their approach to your life insurance. Big online agencies may have an incentive to push their business to one company and that company may not be the best value for you. Individual agents often trap themselves (and you) into products that make them more money and cost you more than you need to spend. Need more details?
Not always. If your death won’t cause anyone financial hardship, then no. Those hardships can be leaving a family without enough income to get by, a loan going unpaid or leaving a business partner with no way to buy your portion of a business. If any of those possibilities exist, then the answer is yes. Need more details?
More Questions? Check Out Our Blog!
The Hinerman Group knows that every situation is unique and it can be difficult finding the best answers. Be sure to check out our blog where you will find a comprehensive bank of topics covered regarding Life Insurance. The background covered in The Hinerman Group blog will point you in the right direction and help you get your family the coverage you need.
Want to talk? Call Ed directly at (719) 539-7914 for a FREE CONSULTATION. *Ed released the fish and it went on to have a full life.