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How Life Insurance Works in Rhode Island
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Types of Rhode Island Life Insurance
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Term Life Insurance
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Permanent Life Insurance
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Rhode Island Life Insurance Laws
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The Cost
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Rhode Island Life Insurance Resources
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FAQs
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EZ Can Help!
How Life Insurance Works in Rhode Island
When you purchase life insurance, you enter into a binding contract with your chosen insurance company. You agree to pay your designated monthly premiums. And as long as you continue to do so, your agreed-upon death benefit amount will be paid to your beneficiaries after you pass. Your beneficiary or beneficiaries will receive a lump sum. Which can be used for any purpose, including paying off debts, saving for college, or replacing your income.
If you have dependents, debts, or other financial obligations that will still need to be met after your death, life insurance is a necessity. This is especially true if you are the sole breadwinner for your family: life insurance will be essential in protecting your loved ones financially after you are gone.
Types of Life Insurance Available in Rhode Island
There are so many options when it comes to life insurance policies that you are sure to find one that is right for you. But before you land on the right policy, you’ll need to know what you’re looking for, and make some decisions regarding what kind of policy you want. The first decision you’ll have to make is between the two main types of life insurance: term life insurance and permanent life insurance.
When making this decision, you’ll have to consider your budget and what kind of coverage you’re looking for. For example, do you want a policy that will cover you for your entire life? Or are you only interested in getting coverage while you meet a specific financial obligation? You’ll also have to think about what extra features you want included with your policy, if any.
Term Life Insurance
Term life insurance tends to be the more popular choice because of its affordable premiums. This type of policy is usually cheaper than permanent life insurance because term life does not cover you indefinitely. Instead, you choose your policy’s term. A policy’s term can be anywhere from one to thirty years, with the average being fifteen. If you pass away while the policy is still in effect, your beneficiaries will receive a death benefit that is not subject to taxation.
These policies are also pretty straightforward, making them an easy choice. Most term life insurance policies have fixed premiums that do not change throughout the policy’s term.
There are several types of term life insurance policies, including:
Level Term Life Insurance
With level term life insurance, both the death benefit and the premiums are set when you purchase your policy. So, they will not change. Most people who purchase life insurance choose level term policies.
Annual Renewable Term Life Insurance
Annual renewable life insurance is a one-year term life insurance policy. Policies can be renewed on an annual basis, but the premium will most likely rise each time you renew.
Increasing Term Life Insurance
The death benefit from an increasing term life insurance policy will rise at set intervals throughout your term. For example, your death benefit amount might increase by 5% annually. Unlike with other forms of term life insurance, increasing term insurance premiums can fluctuate.
Decreasing Term Life Insurance
The premiums for decreasing term life insurance never change, but the death benefit decreases over the term of the policy. The most common reason for purchasing this type of policy is to provide coverage while repaying a loan or mortgage. As the loan is repaid, 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. ROP policies are significantly more expensive than other types of term life insurance. However, many people still find the return of premiums feature very attractive.
Permanent Life Insurance
Permanent life insurance is different from term life insurance because it will cover you for as long as you keep paying the premiums. Premiums for permanent life insurance, especially policies that include a cash value component that grows over time, are typically higher than those for term life insurance.
There are numerous types of permanent life insurance policies available, including:
Whole Life Insurance
Whole life insurance provides a guaranteed death benefit as well as the ability to accumulate cash value. Interest on your cash value accrues at a predetermined, tax-free rate throughout the policy’s term.
Universal Life Insurance
Universal life insurance policies are the most flexible option available. The policy’s premiums and death benefit can both be adjusted. Premiums go first toward covering the cost of insurance (COI), and then toward building up your cash value. Which you can use to pay future premiums if you so choose. In addition, if you want to save even more money on your premiums, you can reduce the amount of your death benefit at any time.
Indexed Universal Life Insurance
This type of permanent life insurance has a cash value that is tied to a stock index. So, you can earn money if your stocks do well. The premiums for this policy can be adjusted in the same way that they can be for a universal life policy as the cash value of the policy increases. Your indexed universal life insurance (IUL) could eventually become a no-premium policy, with the cash value covering the entire premium.
Variable Universal Life Insurance
The cash value of a variable universal life (VUL) policy, like the cash value of other universal life insurance policies, can be invested. But with VUL, you can invest using subaccounts that are similar to mutual funds. VUL policies, like traditional universal life insurance, have adjustable premiums.
Final Expense Life Insurance
If you are older or have health problems that make it difficult to obtain a standard policy, final expense insurance may be a good option for you. These policies are more expensive than others because you will not need to undergo a medical exam. And they only pay out between $2,000 and $35,000. A final expense insurance policy’s death benefit is meant to be used to pay for burial, cremation, or funeral expenses. With that being said, your beneficiaries will be free to use the death benefit funds for any purpose they see fit. Such as a vacation or the settlement of outstanding bills.
Rhode Island Life Insurance Laws
The insurance industry in Rhode Island is primarily governed by Chapter 27 of the Rhode Island Code, though other consumer protection laws have also been enacted. The state agency responsible for monitoring insurance firms in Rhode Island is the Department of Business Regulation.
These regulations and agencies mean you’ll have certain protections and rights when you purchase life insurance in Rhode Island. You should pay particular attention to the following guidelines:
Free Look Period
Rhode Island law mandates a 10-day evaluation period for new policies, known as a free look period. During this time, you’ll be able to evaluate coverage before committing to the policy long-term. If you decide your new policy isn’t right for you, you’ll be able to cancel your policy within these 10 days and get a full refund.
Grace Period
There is a grace period built into most insurance policies, meaning that if you miss a payment, your policy cannot be canceled if you pay within a certain reasonable time. In addition, your beneficiaries will still be able to make a claim if you pass away during your designated grace period. In Rhode Island, you’ll have 31 days to make up a missed payment before your insurance company can cancel your policy.
Benefit Guarantee
Your life insurance policy in Rhode Island is backed by the Rhode Island Life and Health Insurance Guaranty Association for your added safety and security. This association will cover up to $300,000 in death benefits and up to $100,000 in cash value if your life insurance company goes under.
To be eligible for this guarantee, your insurance premiums must be current and your provider must have maintained a valid license to do business in Rhode Island.
Settlement Timelines
Life insurance companies in Rhode Island have 30 days to pay any claims submitted electronically. While claims submitted via regular mail have a 40-day deadline. If an insurance company does not pay the claim in this amount of time, the death benefit will begin to accrue interest. This ensures that residents of Rhode Island will receive their payouts in a timely manner.
The Cost
Your life insurance premium will vary depending on personal details like your age, health, and even your gender. Getting a quote for a policy from one of our EZ agents is the quickest way to find out how much coverage will cost for you. But to give you an idea, a 32-year-old healthy man in Rhode Island could pay anywhere from $20 to $58 per month for a $772,000 policy with a 20-year term.
Rhode Island Life Insurance Resources
In Rhode Island, there are several resources in place to help you with any problems with your insurer or policy. These resources include:
- Insurance Division, Rhode Island Department of Business Regulation – The Insurance Division not only oversees the industry but also provides helpful resources for policyholders. They provide information, listen to complaints, and offer an insurance company license lookup database.
- Rhode Island Life & Health Insurance Guaranty Association -Your cash value or death benefit will be paid even if your insurance company goes bankrupt, thanks to this organization.
- American Council of Life Insurers (ACLI) – Visit the ACLI website to learn more about the life insurance industry; the glossary in particular will help you get a handle on the terminology used in your policy.
FAQs
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Does Rhode Island 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 Rhode Island?
There are a lot of good ways to get life insurance in Rhode Island. At the top of the list are Northwestern Mutual, Lincoln Financial, MassMutual, Prudential, and John Hancock.
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How much does life insurance cost in Rhode Island?
There are many things that can change how much life insurance costs, but here’s an example. A healthy 32-year-old woman in Rhode Island will pay an average of $30.96 a month for a 20-year term policy that costs $772,000 and lasts for 20 years. On the other hand, a healthy 32-year-old man will pay about $32.06 for the same policy.
EZ Can Help!
At EZ we understand that you want the best for your family without breaking the bank. We also know how time-consuming and stressful finding the right policy for you can be. So, we make every effort to simplify the process of purchasing life insurance and offer all of our services for free. You won’t have to pay a dime 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.
