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How Life Insurance Works in Maine
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Types of Life Insurance Available in Maine
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Term Life Insurance
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Permanent Life Insurance
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Maine Life Insurance Laws
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The Cost
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Maine Life Insurance Resources
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FAQs
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EZ Can Help!
How Life Insurance Works in Maine
A life insurance policy is essentially a contract between you and your chosen insurance company. You agree to pay your premiums. Then if you die while the policy is still active, your chosen beneficiaries will be entitled to a lump-sum death benefit from the insurance company. They will be free to use this payout however they choose. Many people use it to pay off a mortgage, save for retirement or college, or even just replace an income that they relied on. This flexibility makes life insurance a great option for keeping your family financially secure. In addition, the money they receive will be tax-free, unlike money they might receive from your estate.
Types of Life Insurance Available in Maine
Because there are so many types of life insurance policies to choose from, virtually anyone can find a life insurance policy that is right for them. But finding the right one for you can take time, and some strategic decision making. The first thing you need to decide is which of the main types of policy you should go with:
- Term life insurance
- Permanent life insurance
When deciding between term and permanent life insurance, two of the most important factors to consider are how long you would like the policy to cover you for, and how much you are willing to pay for your policy.
Term Life Insurance
Term life insurance premiums tend to be lower than those of permanent life insurance. So, term life tends to be the more popular choice. This type of policy is usually cheaper because it will not cover you indefinitely. Instead, when you buy term insurance, you specify how long the policy will cover you for. “Terms” are typically 15, 20, 25, or 30 years. These policies are also straightforward. The amount of your monthly premium is, in most cases, guaranteed to remain the same for your entire term. If you die while the policy is still in effect, your beneficiaries will receive a tax-free death benefit. Which they can use however they choose.
There are several types of term life insurance policies available, including:
Level Term Life Insurance
With level term life insurance, the death benefit and premiums are fixed for the duration of the policy. Most people who purchase term life choose a level term policy.
Annual Renewable Term Life Insurance
Annual renewable life insurance is a one-year term life insurance policy. You will be able to 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 grows 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, the premiums for increasing term insurance may increase or decrease annually.
Decreasing Term Life Insurance
On the other hand, the death benefit of this type of policy will gradually decrease over the course of the policy, while the premium will stay the same. These policies are typically purchased for coverage while repaying 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) insurance, your premium payments will be refunded if you don’t die before the policy’s expiration date. While many people find the return of premiums feature appealing, you should know that the cost of ROP policies is significantly higher than that of other types of term life.
Permanent Life Insurance
Term life and permanent life insurance differ in a few significant ways. First, with permanent life insurance, your policy will remain in effect for the rest of your life as long as you continue to pay your premiums on time. Next, these policies usually include a cash value. Which is a type of savings account that you can borrow against or even use to help pay your premiums. Finally, because of these features, premiums for these policies are typically higher than those of term life policies.
There are numerous types of permanent life insurance policies available, including:
Whole Life Insurance
This type of basic permanent life insurance provides a guaranteed death benefit and has fixed premiums. In addition to providing a death benefit, a whole life insurance policy can accumulate cash value that earns interest at a predetermined, tax-free rate.
Universal Life Insurance
With universal life (UL), you change the amount of your death benefit as well as your premium payments at any time. You can choose to lower your death benefit to lower your premium payments, or, once you accrue sufficient cash value, you can use that toward your premium payments, thus lowering them.
Indexed Universal Life Insurance
Indexed universal life, or IUL, insurance is another type of permanent life insurance that includes a cash value. But with IUL, you can invest your cash value in a stock index. Which is a predetermined grouping of various stocks. That means you have the opportunity to accrue more money than you would with a set interest rate (as whole life offers). IUL premiums, like universal life policy premiums, can be changed. They increase and decrease in proportion to the cash value of the policy. Eventually, the cash value may be sufficient to cover everything, and you will no longer be required to pay the premium.
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 it can be invested in the policy’s subaccounts, which are similar to mutual funds. Premium adjustments are possible, just as they are with traditional universal life insurance.
Final Expense Life Insurance
A final expense policy is a type of whole life insurance that pays out a small benefit, usually from $2,000 to $35,000. Which is intended to pay for final expenses such as a burial, cremation, or funeral services. With that being said, 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 plans have pros and cons. If you’re older or in poor health, a final expense policy might be a good option for you, since you will not be required to undergo a medical exam. But it’s important to note that these policies pay out relatively little and can be a bit expensive.
Maine 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. That means the state of Maine has life insurance laws in place to protect consumers. The Maine Insurance Code, found in Title 24 of the Maine Revised Statutes, is the primary regulating force behind the state’s insurance industry. The Bureau of Insurance is in charge of overseeing the insurance industry in Maine. In general, Maine has enacted fewer consumer safeguards than many other states.
Free Look Period
In many states, insurance companies are required to offer a free look period, or a short period of time during which you can cancel your policy and get a full refund. But in the state of Maine, the free look period varies from insurance provider to insurance provider since there is no state regulation requiring a free look period. With that being said, all of the major carriers still provide this service as a gesture of good faith toward their customers.
Grace Period
Most states, including Maine, require insurance companies to allow you 30 days after a missed payment before your coverage lapses. Your insurance company will still be obligated to pay the full death benefit to beneficiaries if you pass away during this time frame. As a result, if you are ever a little late with a premium payment, you won’t lose out on your life insurance benefits and you won’t need to go through the underwriting process again to get a new policy.
Benefit Guarantee
The Maine Life & Health Insurance Guaranty Association will cover some of your benefits if your insurer goes out of business. This organization only covers losses up to $100,000 per policyholder and $300,000 per insured person. These maximums apply regardless of the total number of policies or the value of them.
The Cost
The cost of your premiums will most likely be affected by factors such as your age, health, and even your gender. Get in touch with one of our EZ agents for the quickest and most precise information regarding prices. If you tell them what you’re looking for, they’ll give you no-obligation quotes for the best policies for you. But to give you an example of prices, a healthy 36-year-old man who does not smoke could pay anywhere from $19 to $53 per month for a 20-year $645,000 policy in Maine.
Maine Life Insurance Resources
In Maine, there are several resources in place to help you if you have any problems with your insurer or policy. These resources include:
- State of Maine Bureau of Insurance – The Bureau of Insurance is the state agency in charge of overseeing the insurance market. They offer a licensee lookup so that consumers can verify that a life insurance provider is authorized to do business in their state.
- Maine Life & Health Insurance Guaranty Association – Maine law mandates membership in the Maine Life & Health Insurance Guaranty Association for any insurance company conducting business in the state. In the event that a guaranty association member company goes out of business, policyholders will be protected by the association’s coverage.
- NAIC’s Life Insurance Policy Locator Service – If you believe you may have been named as beneficiary of a policy, you can use this locator service. Companies taking part in this initiative will share policy details with beneficiaries and authorized third parties.
FAQs
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Does Maine 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 Maine?
In Maine, there are a lot of good ways to get life insurance. MassMutual, Progressive, Prudential, Transamerica, and New York Life are at the top of the list.
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How much does life insurance cost in Maine?
There are many things that can affect how much life insurance costs, but here’s an example. A healthy 36-year-old woman in Maine will pay an average of $28.10 per month for a 20-year term policy that costs $645,000. A healthy 36-year-old man, on the other hand, will pay about $31.04 for the same policy.
EZ Can Help!
At EZ, we understand that everyone has unique requirements, priorities, and financial constraints, and we know that you want the best for your family without breaking the bank. 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.
