Start by asking yourself these 3 questions.

1. How long do I need the policy? Term insurance may be great fit if you need coverage for a limited length of time like 10 to 20 years. If you want lifelong coverage permanent insurance may be a better choice.

2. How much can I afford? While term policies typically cost less than permanent policies, the cost for any type of coverage is based on age. The earlier you buy a policy, the less it will cost.

3. How much risk am I comfortable with? This applies two policies that offer cash value (permanent policies). You can choose how you want your cash to grow from, policies that offer a fixed interest rate to more aggressive investment strategies.

Permanent policies generally have a higher initial premium than term policies, because a portion of the premiums go towards building cash value. But both term and permanent policy costs are generally based on three factors:

Mortality. This is the calculated likelihood of death, largely based on age, gender, health, occupation, and hobbies.

Expenses. These include the costs of operating the issuing company and administering the policy.

Riders. These are benefits added to the base policy, which are often, that may require additional premiums.

If you get caught in a lie on your life insurance application, insurance companies would likely rate you at a higher premium or deny you a policy. In the event you did lie or misrepresented information on your policy and you die, the insurance company could either lower the benefit your family receives or deny the claim completely.

– Step 1: Application Quality Check

– Step 2: Paramedical Exam

– Step 3: Attending Physician Statement

– Step 4: Medical Information Bureau Check

– Step 5: Prescription Check

– Step 6: Motor Vehicle Report

– Step 7: Actuarial Tables

Some term policies have a return of a premium feature that allows for a refund of all or some of the premiums you paid through the term of the life insurance, if no death benefit was paid. The premiums for policies with this feature tend to be higher, and you must be careful not to miss any payments throughout the term in order to take advantage of this feature.

Most policies have a contestability period of two years after you buy the policy. During this time, if the insurance company finds that they issued the policy under misrepresentation or withholding of information by you, they can declare your policy void.

Most policies have a 31-day grace period wherein you can pay the premium with no penalty or interest. If you have a term policy and do not make the payment within this grace period, the insurance company will usually terminate the policy. If you have a permanent policy, you can authorize the insurance company to draw your premium from your policy’s cash value.

A life insurance policy provides tax free money to your loved ones when you die. It can help cover final arrangements or pay off a mortgage or other expenses. Some policies also build cash value, which you can use during your lifetime.

There are 2 main types of life insurance policies:

Term Life Insurance. This type of policy less until a certain age or for a certain period of time. When the term is up, you can renew your policy or let it end. It tends to be less expensive than permanent insurance.

Permanent Life Insurance. This type of policy offers coverage you can’t outlive, as long as you pay your premiums. There are different types of policies, but most build cash value. You control when and how take payments from your policy (there are no required distributions or early withdrawal penalties).

Sure, provided there is an insurable interest in a relationship and with the insured’s consent. Insurable interest is a reason to buy life insurance on someone else because you could undergo a financial disaster if they die:

1. Husbands, wives, or children

2. A business owner can buy life insurance on his key employees

3. Creditors are allowed to take a policy on their borrowers

Life insurance riders are add-on provisions to enhance or customize your current coverage to fit your needs. Some riders come at no additional cost and are baked in the coverage. It’s worth noting that writers are purchased with the policy and can’t be added later. Here are a few common purchased riders:

– Waiver of Premium

– Disability Income

– Term Conversion

– Accelerated Death Benefit

– Child’s Term Life

– Accidental Death Benefit Rider

– Return of Premium (ROP)

Most plans do require medical testing and charge premiums based on the level of risk they assigned to you based on the testing. However, even if you are not in top health or have a serious health condition, there are still some options available with guaranteed issue plans, although this comes at the cost of a higher monthly premium and a lower death benefit.

Term insurance plans cover you for a term of one or more years, and it pays a death benefit died in that term. However, even if you don’t die within the term, you have not wasted your money any more than when you buy car insurance but never have an accident.

You have bought yourself Peace of Mind that’s your beneficiaries will receive the death benefit if you should die within the term. Term policies typically offer the lowest monthly premium and are usually the best option if you have a limited budget or a temporary need. You can typically renew term policies for one or more terms even if your health has changed, however, each time you do so, the premium may be higher.

Some policies have a provision that allows you to collect a significant portion of the death benefit while you are still alive should you become terminally ill. The money can be used at your discretion to pay for medical expenses or even to do specific things with your family and friends while you still can. The amount you take out early will be subtracted from the death benefit payment along with interest.

Insurance companies pay death benefits to your beneficiary after you die. Some policies allow you to access a portion of the death benefit if you become chronically or terminally ill. Payout options typically include:

LUMP SUM: The death benefit is distributed to the beneficiary in one payment.

INCOME OPTIONS: The insurance company keeps the death benefit and an income is paid to the beneficiary for life (or for some other stated period of time).

A CONTINUED INTEREST ACCOUNT: The death benefit is held by the insurance company in an interest-bearing account, which can be accessed by the beneficiary on demand.

Choosing an initial rate guarantee period is easy. simply match the period of time you’ll need coverage to the available rate guarantee period.

For example, if your children are young or you have decades to go on your mortgage, look at 20 or a 30 year term life. If your children are leaving the nest and your home is paid off or nearly paid off, perhaps 10 or a 15 year term might fit the bill.

Nice Try! You probably know that smokers pay two to four times as much as non-smokers do, but this trick wouldn’t work. In order to get the best non-smoker rate, you must abstain from tobacco for three to five years (each company has a different underwriting guideline).

Some companies will give you a standard non-smoker rate after one year of abstinence. It’s worth mentioning that you should never lie about your smoking habits to the insurer.

If I had to rank the number one reason clients are so angry, it is discovering they just bought accidental death and dismemberment (AD&D) and not a traditional life insurance policy. Since many potential buyers don’t understand life insurance nuances, they fell prey to the wrong brokers or agents who just sold them on the idea that they bought life insurance at the best price.

An accidental death and dismemberment policy pay the death benefit to beneficiaries only if you die as a result of an accident related event. If you had cancer, heart attack, stroke, or any disease and died as a result, you guessed it… beneficiaries will get zilch.

First thing first: If you or someone you know is considering suicide, please talk to someone about your thoughts. The suicide provision states that, if you die within two years after buying the policy as a result of suicide, the carrier will contest your claim and will not pay your beneficiaries. After two years, an insurer can’t challenge the death claim and must pay the benefit.

Life insurance prices are fixed by law and are subject to the insurance carrier and the State’s Department of Insurance Approval. If that were the case, brokers, agent’s, and the insurance companies couldn’t compete ethically in the marketplace, and consumers would be even more baffled with life insurance.

As a client, you may choose to work with a broker because he can stop all companies and offer you the best one for your situation. Besides, a broker doesn’t charge a fee because he gets paid by insurance carrier.