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How Life Insurance Works in Louisiana
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Types of Louisiana Life Insurance
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Term Life Insurance
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Permanent Life Insurance
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Louisiana Life Insurance Laws
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The Cost
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Louisiana Life Insurance Resources
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FAQs
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EZ Can Help!
How Life Insurance Works in Louisiana
A life insurance policy is essentially a contract between you and your chosen insurance company. You commit to making premium payments. In return, your insurer will pay out an agreed-upon lump-sum death benefit to your chosen beneficiary(s)if you pass away while the policy is still active. Your beneficiaries will be able to spend the money on whatever they choose. From paying off a mortgage to saving for retirement or college to simply replacing your income. And, unlike money linked to your estate, the death benefit they receive will be tax-free.
Types of Louisiana Life Insurance
Because there is such a variety of policies to choose from, virtually anyone can find a life insurance policy that works for them. There is certainly a policy out there for you. You just have to know what is available, so you can make the right decisions. The first choice you’ll have to make is between the two main types of policies:
- Term life insurance
- Permanent life insurance
When choosing between term and permanent life insurance, one of the most important considerations will be how long you want the policy to cover you for. You’ll also have to think about how much you’re willing to spend on your premiums.
Term Life Insurance
Term life insurance tends to be more popular than permanent life insurance. Mostly because it is the more affordable of the two. This type of policy is more affordable because it does not offer indefinite coverage. Instead, when you buy term life insurance, you choose the length of time the policy will cover you. Terms are typically 15, 20, 25, or 30 years. Term life is also pretty simple, because your monthly premium is usually guaranteed to remain the same for the duration of your coverage. Your beneficiaries will receive a tax-free death benefit if you die while the policy is still in effect. Which they can use however they choose.
There are several types of term life policies available, including:
Level Term Life Insurance
With level term life insurance, the death benefit and premiums are fixed for the policy’s entire term. This basic policy is one of the most popular types of term life insurance.
Annual Renewable Term Life Insurance
Annual renewable life insurance is a one-year term life insurance policy. You can renew your policy on an annual basis, but the premiums will most likely rise each year.
Increasing Term Life Insurance
The death benefit of an increasing term life insurance policy increases over the course of the policy’s coverage period. For example, the death benefit might increase by 5% each year. Unlike with other types of term life, there is a chance that the premiums for increasing term life insurance might increase or decrease over the course of the policy’s term.
Decreasing Term Life Insurance
With this type of policy, on the other hand, the death benefit will gradually decrease over the course of the policy, while the premium will remain the same. These policies are typically purchased for coverage while repaying a mortgage or loan. As the loan is repaid, the amount of the death benefit decreases.
Return-of-Premium Life Insurance
With return-of-premium (ROP) term life insurance, your premium payments will be refunded if you don’t die before the policy’s expiration date. Many people find the return of premiums feature appealing. However, you should be aware that the cost of ROP policies is significantly higher than that of other types of term life insurance.
Permanent Life Insurance
There are some significant differences between term life insurance and permanent life insurance. First, your permanent life insurance policy will remain in effect for the rest of your life. As long as you continue to pay your premiums on time. Next, permanent life policies usually include a type of savings account that accrues interest, known as cash value. You can use this cash value to borrow against, or even to help pay your premiums. And finally, because of these features, premiums for permanent life policies are typically higher than those of term life policies.
There are numerous types of permanent life insurance policies available, including:
Whole Life Insurance
Whole life insurance has a guaranteed death benefit and fixed premiums. In addition to providing a death benefit, a whole life insurance policy can accumulate cash value and earn interest at a predetermined, tax-free rate.
Universal Life Insurance
With universal life, you can change the value of your policy’s death benefit, as well as your premium payments at any time. You can choose to lower your death benefit amount in order to lower your premium payments. Or you can use the cash value that the policy accrues toward your premium payments, thus lowering them.
Indexed Universal Life Insurance
Indexed universal life, or IUL, insurance is another type of permanent life insurance with a cash value. But with IUL, the cash value can be invested in a stock index. Which is a predetermined grouping of various stocks, so you won’t be locked into one set interest rate. An IUL premium, like a universal life policy premium, can change. It can increase or decrease in proportion to the cash value of the policy. One day, the cash value may be sufficient to cover everything, and you will no longer be required to pay your premiums.
Variable Universal Life Insurance
The cash value of a variable universal life (VUL) policy, like the cash value of other types of universal life insurance policies, can be invested, but with this type of policy you can invest your cash value in subaccounts, which are similar to mutual funds. Premium adjustments are possible, just as they are with traditional universal life insurance.
Final Expense Life Insurance
Final expense life insurance is a type of whole life insurance that pays out a small death benefit, typically between $2,000 and $35,000, which is intended to pay for final expenses such as a burial, cremation, or funeral services. But your beneficiary will have complete control over how the death benefit funds are spent. The funds could, for example, be used to pay the beneficiary’s taxes or to take a vacation.
These policies have their advantages and disadvantages. They can be a very good option if you are older or in poor health, since they don’t require a medical exam and usually go into effect immediately. But, because of these features, they can be more expensive than other policies.
Louisiana Life Insurance Laws
In the case of life insurance policies, the federal government has largely delegated the responsibility of regulating the insurance industries and protecting consumers to the states. So, Louisiana has life insurance laws in place to protect consumers. The primary regulating force behind the insurance industry in the state of Louisiana is Title 37 of the Louisiana Administrative Code, but other legal provisions have also been adopted as consumer protection laws. The Louisiana Department of Insurance regulates the state’s insurance industry.
In Louisiana, you will have the following rights when you purchase life insurance:
Free Look Period
If you purchase life insurance in Louisiana, your insurance company is required to give you a “free look period,” during which you have the option to cancel your coverage and receive a full refund. Louisiana mandates a 10-day minimum free look period. This means that within 10 days of signing the agreement, all life insurance companies must allow policyholders to cancel their policy without penalty.
Grace Period
You will also be given a grace period if you miss a premium payment in the state of Louisiana. You will be given 30 days to make up for your missed payment, during which your insurance company is obligated to keep your policy active and pay out to your beneficiaries if you pass away. As soon as the payment is made, your policy will once again be considered in good standing. There is no limit set on the number of grace periods that you can be granted.
Benefit Guarantee
Life insurance benefits in the state of Louisiana are protected in the event of the insolvency or bankruptcy of your insurance company. Death benefits and cash value up to $300,000 and $100,000 respectively are guaranteed in Louisiana by the Louisiana Life & Health Insurance Guaranty Association. In order for your policy to be protected, your premium payments must be current, and your insurer will need to have had a valid license to sell insurance in the state.
The Cost
The cost of your premiums will be affected by factors such as your age, health, and even your gender. Get in touch with one of our EZ agents, and simply give them some basic information for the quickest and most precise quotes. But to give you an idea of prices, a healthy 30-year-old man who does not smoke could pay anywhere from $16 to $62 per month for a 20-year $632,000 policy in Louisiana.
Louisiana Life Insurance Resources
In Louisiana, there are several resources in place to help you if you have any problems with your insurer or policy. These resources include:
- Louisiana Department of Insurance – The Louisiana Department of Insurance offers a variety of services to consumers, including the following:
- A compilation of insurance statutes and regulations
- An online form for filing complaints
- Reports of fraudulent activity
- Tools for looking up companies and licenses
- Louisiana Life & Health Insurance Guaranty Association – Louisiana state law mandates membership in the Louisiana Life & Health Insurance Guaranty Association for any insurance company in the state. In the event that a guaranty association member company is liquidated due to financial difficulties, policyholders will be protected by the association’s coverage.
FAQs
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Does Louisiana require life insurance?
No, you will never be forced to get life insurance. It is always your choice.
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What are the best life insurance companies in Louisiana?
There are many good ways to get life insurance in Louisiana. At the top of the list are Mutual of Omaha, MetLife, Nationwide, Progressive, and New York Life.
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How much does life insurance cost in Louisiana?
There are many things that can change how much life insurance costs, but here’s an example. A healthy 30-year-old woman in Louisiana will pay an average of $27.83 a month for a 20-year term policy that costs $632,000. On the other hand, a healthy 30-year-old man will pay about $32.20 for the same policy.
EZ Can Help!
At EZ, we get that everyone has unique requirements, priorities, and financial constraints, and we also understand that you want the best for your family without emptying your savings. So not only do we make every effort to simplify the process of purchasing life insurance, we also offer all of our services for 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 877-670-3560 to get started.
