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How Life Insurance Works in South Carolina
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Types of Life Insurance Available in South Carolina
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Term Life Insurance
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Permanent Life Insurance
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South Carolina Life Insurance Laws
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The Cost
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South Carolina Life Insurance Resources
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FAQs
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EZ Can Help!
How Life Insurance Works in South Carolina
When you buy life insurance, you and the insurer you choose enter into a legally binding contract. You pay agreed-upon monthly premiums. If you continue to pay these premiums and die while the policy is still active, your chosen death benefit amount will be paid to your designated beneficiaries. The lump-sum payout that they will receive can be used for any purpose. Including paying off debts, saving for retirement or college, or replacing your income.
Life insurance is something you should seriously consider if you have dependents, debts, or other financial obligations that will continue after your death. And if you are the sole breadwinner for your family, life insurance is essential to financially protect your loved ones after you are gone.
Types of Life Insurance Available in South Carolina
There are so many options available today when it comes to life insurance that there’s no doubt, we can find the right one for you. But you’ll need to make a lot of decisions about what you want and need. The first of which will be between the two main types of life insurance:
- Term life insurance
- Permanent life insurance
When deciding between term and permanent life insurance, the two most important factors to consider are budget and anticipated coverage needs. For example, you’ll have to think about whether you want to pay for indefinite coverage or only for coverage that lasts while you’re meeting a specific financial obligation. You should also decide if you want any extra features included with your policy, like a cash value savings account.
Term Life Insurance
Because of its low premiums, term life insurance has become the more popular choice. Term life insurance policies are less expensive because of the limited duration of coverage. With term life, you choose the length of your policy’s term. The term of a policy can range from one to thirty years, with fifteen being the most common. If you die while the policy is still in effect, your beneficiaries will receive a tax-free death benefit. Most term life insurance policies have fixed premiums that do not increase over the course of the policy.
There are several types of term life policies available, including:
Level Term Life Insurance
The death benefit and premiums are set when you purchase level term life insurance. They will remain unchanged for the duration of the policy. The majority of people who buy 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. However, the premiums will most likely go up every year that you renew.
Increasing Term Life Insurance
An increasing term life insurance policy’s death benefit will increase at predetermined intervals throughout the policy’s term. For example, the death benefit may increase by 5% per year. Increasing term insurance premiums, unlike those of other types of term life insurance, can fluctuate.
Decreasing Term Life Insurance
Although the premium for decreasing term life insurance always stays the same, the death benefit amount will gradually decrease. The most common reason for purchasing this type of policy is to provide coverage while a mortgage or other type of loan is being paid off. The death benefit decreases as the loan is repaid.
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. But many people find the return of premiums feature very attractive.
Permanent Life Insurance
Permanent life insurance differs from term life insurance in that this type of policy will remain in effect as long as you continue to pay the premiums. Premiums, particularly those for policies that include a cash value component that grows over time, are typically higher than term life insurance premiums.
There are numerous types of permanent life insurance policies available, including:
Whole Life Insurance
Whole life insurance provides both a guaranteed death benefit and the ability to build cash value. Interest on the 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. The premiums and death benefit of the policy are both adjustable. Premium payments are applied first to the cost of insurance (COI), and then to the accumulation of cash value. Which you can use to pay future premiums if you so desire. You can also reduce the amount of your death benefit at any time to save money on premiums.
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 issues that make obtaining a standard life insurance policy difficult, final expense insurance may be a good option for you. These policies are more expensive than others since they do not require a medical exam. Their payouts are also small, ranging from $2,000 to $35,000. The death benefit of a final expense insurance policy is intended to cover the insured’s burial, cremation, or funeral expenses. But your beneficiaries will be free to use the death benefit funds for whatever purpose they see fit, such as a vacation or the payment of outstanding bills.
South Carolina 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, South Carolina has its own regulations surrounding life insurance policies and insurers. Title 38 of the South Carolina Code of Laws is the primary regulating force in the state of South Carolina’s insurance industry, but other legal provisions have also been adopted as consumer protection laws. The South Carolina Department of Insurance regulates the state’s insurance industry.
The following are the most important rules that may apply in your situation:
Free Look Period
State law mandates that new policyholders get a free look period after purchasing a policy to review their policy, and really get to know the terminology and understand each clause and rider. The free look period in South Carolina is 10 days, or 30 days if the policy is mailed. If you decide you no longer want your policy during this time, you can cancel it and request a full refund. If you die during the free look period, your insurer will still be required to pay out your claim to your beneficiaries.
Grace Period
If you miss a premium payment, South Carolina law gives you 30 days to make up this payment, during which your insurance company cannot cancel your policy. If you die during this period and a valid claim is filed, your insurance company will be required to make a full payment to your beneficiaries.
Benefit Guarantee
The South Carolina Life, Accident, and Health Insurance Guaranty Association ensures death claim payouts of up to $300,000 per person, even if your insurance company becomes insolvent or declares bankruptcy and is unable to pay claims. This guaranteed maximum applies regardless of the number of outstanding policies or the size of those policies.
Settlement Timelines
South Carolina requires that all claims be paid out as quickly as possible. To provide an additional incentive for insurance companies to pay claims quickly, state law mandates that interest accrues on all claims starting on the date of death. For this reason, most claims in South Carolina are paid within a month of the insurer receiving the death certificate. Insurance companies can also face fines for failing to pay claims within a reasonable time frame.
The Cost
The price of your insurance premiums will be determined by personal factors such as your age, health, and even gender. Obtaining a quote from one of our EZ agents is the quickest way to determine how much your policy will cost. But to give an example, a 32-year-old healthy man in South Carolina could pay anywhere from $16 to $65 per month for a $628,000 policy with a 20-year term.
South Carolina Life Insurance Resources
In South Carolina, there are several resources in place to help you if you have any problems with your insurer or policy. These resources include:
- The South Carolina Department of Insurance – The SCDOI, as the state’s primary insurance regulatory agency, can answer the majority of questions about South Carolina laws. The agency’s website includes a policy locator service as well as an online consumer complaint form.
- South Carolina 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.
FAQs
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Does South Carolina 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 South Carolina?
There are a lot of good ways to get life insurance in South Carolina. At the top of the list are Primerica, AIG, State Farm, MetLife, and John Hancock.
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How much does life insurance cost in South Carolina?
There are many things that can affect how much life insurance costs, but here’s an example. A 32-year-old woman in South Carolina who is in good health and wants a 20-year term policy that costs $628,000 and lasts for 20 years will pay an average of $21.89 a month for it. A healthy 32-year-old man, on the other hand, will pay about $32.74 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 that finding the right life insurance can be tough. So, we make every effort to simplify the process of purchasing life insurance. We even 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.
