Whole Life Insurance
Whole life insurance is permanent coverage with a premium and death benefit both guaranteed to remain the same. Also, the policy builds cash value for tax-deferred growth that the policyowner can withdraw and use as they see fit.
- Lifetime coverage guaranteed to last forever.
- Cash value growth that you can borrow from as it accumulates.
- Rates are locked in for life.
Term Life Insurance
Term life insurance is a temporary policy that lasts for a predefined period of time. Term policies often last 10-40 years or until you reach a certain age, such as 80 or 85. When the policy ends, you’re no longer insured.
- The most affordable type of life insurance- much cheaper than whole or universal life.
- It is best suited for covering temporary needs such as financial debts or replacing income for those with dependents.
- Because the insurer takes a significant risk when issuing a term policy, the underwriting is stricter compared to other types of life insurance.
Final Expense Insurance
Final expense insurance, commonly known as burial or funeral insurance, is a specialty whole life policy designed to cover all your end-of-life expenses.
- No medical exam required, and applicants with pre-existing conditions won’t be disqualified
- Ultra-fast claim payouts. Most claims are paid out within 24-48 hours upon approval.
- Affordable premiums that never increase and coverage that lasts your entire life
Guaranteed Acceptance Life Insurance
Guaranteed acceptance life insurance is a type of whole life policy with no underwriting of any kind. You do not have to answer health questions, nor take a medical exam. Because approval is guaranteed, the insurer will only refund your premiums if you die during the first 24 months.
- Cannot be denied due to any prior medical issues.
- Lifetime coverage and level premiums.
- Instant application approvals since there is no underwriting.
No Waiting Period Burial & Life Insurance
Life and burial insurance with no waiting period fully protects you for natural and accidental causes of death on the day your policy begins. If you die one day later, the insurer will still pay out 100% of the death benefit.
- Full day-one coverage for any cause of death (except suicide).
- Immediate peace of mind knowing you’re insured and the policy payout will cover your needs.
- No medical exam required, and many insurers will accept applicants with a wide variety of pre-existing medical conditions.
Cremation Insurance
Cremation insurance is a type of small whole life policy with smaller death benefits primarily meant to cover your cremation expenses and other final arrangements.
- No exam required, and applications are approved either instantly or within a couple of business days.
- Fast claim payouts.
- Permanent coverage at a fixed rate.
Instant Life Insurance
Instant life insurance can be purchased entirely online or by phone, without undergoing a medical exam. In most cases, applications are approved instantly or within a few business days.
- Fast coverage for those who need coverage quickly.
- To qualify, you usually just need to answer some basic health questions.
- Most policies (if approved) have no waiting period.
Mortgage Protection Insurance
Mortgage life insurance, also known as mortgage protection insurance, is meant to cover the mortgage balance in the event of the homeowner’s death.
- Can normally be bought without having to take a medical exam.
- If the death benefit exceeds the mortgage balance, the remaining funds remain with your beneficiaries.
- Large benefit amounts are available to cover even very large mortgage balances.
Children’s Life Insurance
Life insurance for children provides a death benefit and cash value growth for a minor. Usually, these are whole life policies, but some companies offer term insurance for children. As adults, children have the guaranteed right to buy additional coverage without having to qualify. When they become adults, the policy can be transferred to them, or the original buyer can maintain ownership.
- Secures a very low locked-in premium for the child’s entire life.
- Can typically be purchased entirely online.
- Builds cash value to help cover significant future expenses, such as college or a home purchase.
Who Should Get Life Insurance?
You should get life insurance if your death would have a harmful financial impact on a loved one. For example, suppose you’re the primary income earner in your household and have dependents. In that case, you need life insurance to replace your income in the event of your death.
If you have no other means to pay for your final expenses, you need a policy to ensure your loved ones are not burdened with your funeral bills. If you have a car note or mortgage balance, you need life insurance to pay those bills off in the event you die.
Which Type Of life Insurance Should You Choose?
When buying life insurance, you want to select the right kind of policy that will best accomplish your goal. It’s vital to consider the features and benefits of each policy type, as well as the cost.
It’s helpful to ask yourself: What would the death benefit payout be used for? That will help identify all your needs so you can then determine which type of policy is best.
In general, you want to choose a permanent policy to address long-term needs such as estate planning or final expenses. Conversely, select term coverage to address temporary needs, such as a mortgage or income replacement.
Financial experts consistently caution that it’s unwise to shop for life insurance solely on price.
Frequently Asked Questions
In nearly all circumstances, the money paid out by a life insurance policy does not create a tax burden for the beneficiaries. According to the IRS, the only time taxes may become due is when A) interest is accrued or B) if the policy was transferred to you in exchange for money or some other valuable consideration. The IRS has an interactive tax assistant that walks you through a series of questions to determine the answer to this question.
A 40-year-old woman can get a $100,000 30-year term life policy for $15 per month, $110 for whole life, or $89 for universal life. For a 40-year-old male, he could get a $100,000 30-year term policy for $17 per month, $126 for whole life, or $99 for universal life. However, it’s vitally important to understand that life insurance rates vary widely based on factors such as age, gender, health history, state of residence, lifestyle, policy type, and the amount of coverage you purchase.
Yes, people with pre-existing conditions can get life insurance. The products you’ll qualify for, and the final cost, will be based on the nature of your entire health history, the severity of your conditions, timing (such as when a health event occurred), your age, and the type of policy you’re seeking. If you have current or past health issues, it’s advisable to speak with an experienced agent who can advise you on what to expect from life insurance options and costs.
There is no universal best type of life insurance. Instead, you should think of life insurance in terms of which type is best suited to serve your needs. For example, you should seek a term life policy to cover any temporary needs, such as paying off a mortgage or replacing income. However, you should seek a permanent policy if you need coverage to pay for your end-of-life costs.
Most life insurance companies will allow you to have as many beneficiaries as you’d like. That includes both primary and secondary (contingent) ones. Also, you can change your beneficiaries at any time.
Life insurance for seniors is available with every life insurance company. Nearly all products available to younger adults are also available to seniors. That includes term life, whole life, and universal life. Keep in mind that seniors over age 75 will have far fewer options solely because of age.
Life insurance through an employer is great, but you still need your own policy. That’s because when you leave your job, there is a high chance that the life insurance benefit will terminate. It’s rare for life insurance to be portable when you leave a job, either due to termination or retirement. It’s also important to note that employer-sponsored life insurance often doesn’t provide sufficient coverage. Essentially, life insurance through your job should be seen as a great add-on, but never rely on it alone for your life insurance needs.
Face value is just another term for “death benefit” or “coverage amount. In other words, it’s the amount of money that would pay out to your beneficiaries when you die.
The proceeds from a life insurance policy will only be paid to an estate if A) all beneficiaries are deceased when the insured dies or B) the estate is named as the beneficiary.
Life insurance policies will all have a suicide exclusion that denies a death benefit payout if the insured commits suicide within the first two years (in some states, it’s one year). The other principal exclusion would be the incontestability clause. This clause grants the insurer the right to investigate any death claim arising within the first two years (in some states, one year). Basically, the insurance company will obtain all your formal medical records from any physician or medical facility. Their goal is to determine if you correctly answered all the health and lifestyle questions when you originally applied. If your records confirm that you did, they will pay out the full death benefit. However, if they discover you had a health issue(s) that would have caused a denial of your application, they will not pay out the death claim. Instead, they would merely refund the premiums you paid. Beyond these two standard exclusions, the only other time a payout would be denied is if A) the insured dies while committing a crime or B) there is clear evidence that the policy was issued under fraudulent terms (such as someone forging your signature).
To cancel a life insurance policy, you generally only need to call the insurance company. In most cases, insurers will accept a verbal request to cancel. Rarely, some will require you to sign a paper form to execute the surrender. No insurance company can refuse your request to cancel, nor can they charge a fee to do so.
