When it comes time to consider purchasing life insurance, many people get overwhelmed by questions or concerns they have. So to ease the minds of consumers who are ready to buy life insurance, Insurance.com has compiled a list of questions and answers to help make the process as painless as possible.
What's the best age to purchase life insurance?
As a rule of thumb, the younger you are, the lower your life insurance premiums will be. That's because your risk of dying is lower than if you were in your 50's or 60's. It's also a smart idea to buy life insurance when you're younger because you are able to lock in to a lower interest rate.
Am I required to take a medical exam?
For most life insurance policies, yes, you are required to take a medical exam at the time of application. This includes Supplemental Group Life (where you already have group life insurance) and also if you are requesting an amount of coverage that exceeds the standard level of coverage. However, if you are just purchasing a policy from a group health insurance or group life insurance plan, then you are not required to take a medical exam.
What happens with the results of my medical exam?
The status of your health determines how you are categorized and what kind of life insurance rates you will be given by your insurance company. Your height, weight, health and whether or not you use nicotine are all taken into account. If you're curious why you were put into a certain classification, be sure to ask your insurance agent. He or she will give you an overview of what factors determined your insurance classification.
Classification status may be changed depending on a person's condition(s). An example of this is if the results of your first medical exam came back showing that you are 60 pounds overweight, a smoker and have an untreated heart condition. Your life insurance company will probably look down on your situation, ultimately putting you into a high-risk category where you will pay more for your premium. But if you take care of yourself, lose weight, kick the habit and get on a health regimen to take care of and control your heart condition, you can go back to your insurance agent in a couple years and request a revision in medical underwriting on your life insurance policy.
Is more than one policy too much?
Not at all! If you have a permanent life insurance policy, then decide you want to take care of a short-term need, you are more than able to purchase and add on a supplemental term life policy. It should be noted if you purchase more life insurance than you need (or more than your expenses show you need), a medical exam or proof that you do not have an outstanding medical condition may be required by your life insurance agency.
Will having more than one policy cancel the other one out?
Nope. If you have a credit life insurance policy and a whole life insurance policy, and you have paid all the necessary premiums, both policies will pay out according to the initial terms of the policy. So your credit life policy will pay off your credit card balance and your full death benefit will be paid out on your whole life policy.
What happens in the event of delinquent payments?
Most policies give you a grace period of between 30 to 31 days to make a payment on your premium. Depending on your situation or reason for not paying, if you pay within that time frame, you will not be charged added interest; if you don't pay within that set-time frame; your policy will lapse.
If you have a permanent life insurance policy, and you are late on your payments, money from your cash value may be drawn to pay the premium; however, this will lower the amount of your cash value. If you are unable to pay due to disability, you may choose to enact or add a "waiver of premium" provision or rider to your policy. In doing so, you won't be required to pay premiums for the duration of your policy.
What do I do if my policy lapses?
Depending on what type of life insurance policy you have, your policy will either remain open, or end. By having a permanent life insurance policy, you are able to use money you saved up in your cash value to pay the premiums with. That advantage of this is that your policy won't be cancelled, but your cash value does deplete. If you have a term life insurance policy, and don't pay within the grace period, when your policy lapses, your coverage ends.
Is there a limit to the number of beneficiaries I name?
As long as the people you choose to name in your life insurance policy have "insurable interest," you can name them as beneficiaries. Typically, a person just chooses his or her spouse, but it is possible to name more than one person.
Can I buy a life insurance policy on someone else?
As stated above, if you have insurable interest in that person, generally meaning they are a close relative or friend; it is possible to buy a life insurance policy on them. The main stipulation when buying a policy on someone else is that they must know about it. You cannot take out a policy without their knowledge and prior consent.
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