So before purchasing a policy in the state of Arkansas, it is essential that you do as much research as you can to gain an understanding of the life insurance market in Arkansas. Read our guide to life insurance in Arkansas. Then contact an EZ agent for help finding the right policy for you.
Jump To:
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How Life Insurance Works in Arkansas
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Types of Life Insurance in Arkansas
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Term Life Insurance
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Permanent Life Insurance
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Arkansas Life Insurance Laws
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The Cost
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Arkansas Life Insurance Resources
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FAQs
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EZ Can Help!
How Life Insurance Works in Arkansas
In simplest terms, a life insurance policy is a contract between you and your chosen insurance company. You make a commitment to your insurer to pay the required premiums. And if you pass away during the term of your policy, your loved ones will receive a death benefit from the insurance company. This benefit takes the form of a lump-sum payment, which your beneficiaries can use for whatever they need.
If you have debts, dependents, or other financial obligations that would need to be taken care of after your death, you should seriously consider purchasing life insurance. And if you are the sole breadwinner in your family, life insurance is especially crucial to ensuring your loved ones are financially provided for in the event of your passing. They can put the money from the policy toward things like retirement savings, mortgage payments, college tuition, and income replacement. Or they can just enjoy the extra cash in their pockets.
Types of Life Insurance In Arkansas
There are a wide variety of types of life insurance policies available. So, you’re sure to find one that suits your needs and budget. But since you have so many choices to make, you’ll need to know where to begin. So, the first thing to think about is which of the two main types of life insurance you want to look into:
- Term life insurance
- Permanent life insurance
This decision will be highly influenced by the specific needs you have. Especially whether you want life insurance for the near future or far into the future.
Term Life Insurance
Term life insurance is the most popular type of life insurance because the premiums are so affordable. And they are generally guaranteed to stay the same for the duration of the policy. These policies are cheaper than permanent life policies because term life does not cover you for the entirety of your life. But you get to choose how long you want to be covered for, or the “term” of your policy. This term can be 15, 20, 25, or 30 years long, with the average being closer to 15 years. A tax-free death benefit will be paid out to your beneficiaries if you pass away while the policy is active.
There are several types of term policies:
Level Term Life Insurance
Level term life insurance is the most popular time of term life policy. With level term, your death benefit and premiums are determined when you purchase your policy. And they will not change throughout the policy’s term.
Annual Renewable Term Life Insurance
Annual renewable life insurance is a one-year term life insurance policy. You can renew your membership every year, but the cost increases with age.
Increasing Term Life Insurance
The death benefit of your increasing term life insurance policy will grow in value over time. This will happen on a regular basis: for example, your benefit amount might increase by 5% each year. Increasing term insurance premiums are more expensive than other types of term life policies, and their premiums may fluctuate over time.
Decreasing Term Life Insurance
These types of policies are typically purchased to cover you while you’re repaying a mortgage or other large loan. Your premiums will remain the same with decreasing term. But the death benefit will gradually decrease over time as the loan is repaid.
Return-of-Premium Life Insurance
Return-of-premium (ROP) insurance is a type of term life insurance that allows you to receive a refund of your premium payments if you don’t die before the expiration date of your policy. These policies are significantly more expensive than other term life policies, but you might find that the benefit of getting your premiums back outweighs the extra costs.
Permanent Life Insurance
Unlike term life insurance, permanent life insurance will cover you for your entire life, as long you pay your premiums on time. The premiums for permanent life policies tend to be higher than those of term life policies, for this reason and because these policies usually include a cash value component.
There are various types of permanent life insurance policies available, including:
Whole Life Insurance
Whole life insurance provides a guaranteed death benefit and set premiums. These policies can also accumulate cash value. Which accrues interest at a predetermined, tax-free rate.
Universal Life Insurance
Universal life insurance is one of the most flexible types of life insurance policies. With this type of policy, you can change the amount you pay in premiums, as well as the death benefit. Once you have enough cash value saved, the cash value can be used to pay for your premiums. You can also choose to lower your premiums by lowering your death benefit amount.
Indexed Universal Life Insurance
With indexed universal life insurance (IUL), you will get a cash value that can increase based on a stock index. Or a predetermined grouping of various stocks. In addition, the premiums for an IUL can be adjusted in the same way that they can be with a universal life policy as the cash value of the policy increases. Your IUL policy could eventually become a zero-premium policy, with the cash value covering your entire premium.
Variable Universal Life Insurance
A variable universal life (VUL) policy’s cash value, like the cash value of other permanent life insurance policies, can be invested. But these policies include investment subaccounts with structures similar to a mutual fund. So, you could end up making or losing money, depending on the fluctuations of the market. In addition, the premiums of VUL policies, like those of traditional universal life insurance premiums, can be adjusted.
Final Expense Life Insurance
There is another type of whole life insurance that you should be aware of, especially if you are older or in poor health, known as final expense life insurance. This type of policy doesn’t usually require a medical exam. But it pays a smaller benefit upon your death than most other policies. Death benefits are usually between $2,000 and $35,000, and are generally meant for covering final expenses. Such as a burial, cremation, or funeral service. But your beneficiary is free to spend the death benefit on anything they want. Such as a vacation or property taxes.
Arkansas Life Insurance Laws
In the case of life insurance policies, the federal government has largely delegated the responsibility of regulating the insurance industry and protecting consumers largely to the states. So, as in other states, in Arkansas there are laws in place to protect life insurance consumers. The primary regulating force behind the insurance industry in Arkansas is Title 23 of the Arkansas Code (Chapters 60-109), but other legal provisions have also been adopted as consumer protection laws. The Arkansas Insurance Department regulates the state’s insurance industry.
When it comes to your rights regarding life insurance, the following rules apply in Arkansas:
Free Look Period
Unlike in some other states, Arkansas does not have a legally required “free look” period. This means that insurance companies in Arkansas do not have to let policyholders cancel their policies and get a refund if they change their minds. Having said that, most Arkansas life insurance companies will still give their customers a reasonable amount of time to “test drive” their policy (usually between 7 and 30 days). You are entitled to a full refund if you cancel the policy during an insurer’s free look period.
Grace Period
Arkansas law does, though, require that insurance companies give you a grace period if you miss a premium payment. This means that if your payment is late, but is paid within a few weeks of the due date, your life insurance policy cannot be canceled. In Arkansas, you have 30 days to make the payment.
Benefit Guarantee
In Arkansas, if your life insurance company goes out of business, your policy will still be guaranteed by the Arkansas Life and Disability Insurance Guaranty Association. If your insurer goes bankrupt, you will be covered for up to $100,000 in lost cash and $300,000 in death benefits. You can only collect on these amounts if you have paid your premiums on time and your insurer is legally licensed in Arkansas.
Contestability Limit
The contestability period is the time frame that an insurer has to challenge any potentially fraudulent or misrepresented claims on your policy application. When this period ends, the policy is usually considered irreversible. So, your insurer will not be able to deny your coverage or deny your beneficiaries’ claims. Except in the case of nonpayment of premiums, life insurance policies in Arkansas become incontestable after a maximum of two years.
Settlement Timelines
All life insurers have two months to pay out on a claim in Arkansas. This means that when a life insurance claim is made in Arkansas, life insurance companies only have a two-month window to pay your beneficiary. The state imposes severe penalties on life insurance companies that fail to pay out on time.
The Cost
Your age, your overall health, and even your gender can all have a significant impact on the cost of your life insurance premiums. Contacting one of our EZ agents is the best way to find out how much you might end up paying for a policy. They can use the information you provide to find you free quotes that are customized to meet your specific needs. But to give you an example of what you might pay for a policy in Arkansas, a 25-year-old healthy man who doesn’t smoke could pay between $15 and $58 a month for a 20-year $576,000 policy in Arkansas.
Arkansas Life Insurance Resources
In Arkansas, there are several state and federal resources in place to help if you have any problems with your insurer or policy. These resources include:
- Arkansas State Insurance Department – The Arkansas State Insurance Department is in charge of enforcing the rules and regulations that govern the sale of life insurance policies in the state. To file a complaint against an insurer or to locate an insurance company, contact this government agency.
- Arkansas Consumer Protection Division – The Consumer Protection Division, which is part of the Secretary of State’s office, warns about common life insurance scams and assists those who fall victim to them. Furthermore, you can seek assistance from this agency if your personal information is compromised as a result of a data breach at your insurance company.
- Arkansas Life and Health Insurance Guaranty Association – Every insurer licensed to operate in Arkansas is a member of the Arkansas Life and Health Insurance Guaranty Association. If your insurer is unable to meet its financial obligations, the association will pay death benefits up to a certain limit.
FAQs
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Does Arkansas require life insurance?
No, life insurance isn’t mandatory no matter where you live.
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What are the best life insurance companies in Arkansas?
There are a lot of good options for life insurance in Arkansas. At the top of the list are MassMutual, Nationwide, Progressive Life, State Farm, and Prudential.
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How much does life insurance cost in Arkansas?
There are many things that can affect how much life insurance costs, but here’s an example. A 30-year-old woman in good health who lives in Arkansas and buys a 20-year term policy that covers $576,000 will pay an average of $23.46 per month. A healthy 30-year-old man, on the other hand, will pay about $31 for the same policy.
EZ Can Help!
At EZ, we understand that everyone has unique requirements, priorities, and financial constraints. We know you want the best financial security for yourself and your family without depleting your savings account. We make every effort to simplify the process of purchasing life insurance for you. Not only that, but each one of our services is completely free! You will not be charged any additional fees for assistance with anything. From answering basic questions to navigating policy selection to the enrollment process and beyond. Simply enter your zip code in the space provided below or call us at 877-670-356 to get started.
