Life Insurance: Common Questions
Life insurance and the importance of having it is something many people prefer not to think about. Unfortunately, if you were to look at your current situation and imagine something taking you out of the picture, are the people you financially support going to be taken care of? This is a scary thought to many people but one that needs to be considered regardless.
It’s been shown in studies that unexpected or premature death of the main financial provider of the home, can negatively impact the family and their financial well-being. Even if life insurance is accessible, it’s not typically adequate. You might be surprised to learn that 48 million Americans, (almost half of all households) either currently have insurance but feel they need more, or they don’t have any life insurance at all.*
*Source: “Facts about Life 2006,” Life Insurance Marketing Research Association International.
Most Common Questions about Life Insurance
Here you will find many answers to the most common questions regarding life insurance. This information should help you proceed with obtaining life insurance for your own family.
Q: “Why Should I Buy Life Insurance?”
When people think about life insurance, they think about funds that would replace their existing income if they were no longer here to earn said wages. Life insurance, for some, is a means of ensuring financial security for their families, especially if they have additional debts to pay. Otherwise, some families are forced to sell their assets just to cover the taxes or any outstanding bills. Life insurance secures money to take care of your family when you pass and an advantage to having life insurance is that it is not taxable income to the beneficiary.
Q: “Can I Use My Life Insurance If I’m Alive?”
There are many life insurance policies that allow lifetime benefits like the following:
- Accelerated Death Benefit – If a person is diagnosed as terminally ill, they can request a payment of the policy’s face amount instead of the payment going to a beneficiary.
- Life Insurance Portability – If you receive life insurance through your employer, you might be able to take it with you if/when you leave the company or retire. This allows you to continue getting group rate benefits and is more convenient for most people.
- Waiver of Premium – If a person becomes disabled, they can keep their protection secured by paying for the premium while on disability.
Q: “Just How Much Life Insurance Do I Need?”
To determine how much life insurance you need depends on your current financial situation and particular circumstances. Our professional life insurance agents are here to make the job easier by helping you estimate how much would be ideal for the well-being of your family.
Q: “How Can I Learn More About a Life Insurance Company?”
Buying life insurance is similar to buying many things. Before you buy it’s important to evaluate the company including their financial strength and ethical reputation. If you want to know more about us, just ask our agents when you call.
Q: “How Do I Determine My Beneficiary?”
It’s important to decide on a beneficiary when getting a life insurance policy. This person will receive your policy benefits when you’re gone. These funds paid to the beneficiary are not considered taxable income under the current tax law. If you have more than one beneficiary, consider keeping your information updated on how you want the benefit paid, based on the life events of your beneficiaries. For example, births, deaths, divorces and marriages may play an important role on how you want benefits paid out so if these things change it’s important to review your policy and update it when necessary.
Q: “Why Do I Have to Answer Health Questions and What Is Medical Underwriting?”
When applying for individual life insurance or a higher amount that what is guaranteed, you will need to have satisfactory evidence that proves you are insurable. In other words, the insurance carrier needs to know that you are a good risk.
Most people with life insurance coverage will undergo a physical exam. This includes the basic information including your weight, height, blood pressure, pulse and a questionnaire regarding your medical history. This physical might also include special tests like an EKG, urinalysis or a blood test.
The medical underwriter is responsible for reviewing the answers you provided for the questionnaire. This includes your height, weight, gender, existing physical condition, if you’re a smoker, etc. All of this criteria is necessary to determine if you meet the acceptance standards of the company for the amount and kind of insurance you desire.
A medical underwriter reviews an applicant’s answers to health questions and considers factors such as current physical condition, height and weight, gender, tobacco status, etc. to determine if the person meets the company’s acceptance standards for the type and amount of insurance requested.
Once an insurance carrier receives all of your information, including your medical history, it’s promptly reviewed by the underwriter and when finished you’ll find out if you are accepted or denied for the policy you requested.
For more information about life insurance, contact one of our friendly insurance agents. We can answer your questions and help you protect what matters most to you!