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How Life Insurance Works in Utah
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Types of Utah Life Insurance
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Term Life Insurance
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Permanent Life Insurance
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Utah Life Insurance Laws
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The Cost
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Utah Life Insurance Resources
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FAQs
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EZ Can Help!
How Life Insurance Works in Utah
When you purchase life insurance, you enter into a legally binding agreement with your chosen insurance company. You agree to pay the company the necessary premiums. Then if you die while your insurance policy is still in effect, your designated beneficiaries will receive a lump-sum death benefit. They will be able to use the money however they choose. For things like debt repayment, saving for the future, or simply replacing your income.
If you have dependents, debts, or other financial obligations that must be met even after your death, you should seriously consider purchasing life insurance. And if you are the primary or sole provider for your family, life insurance is a must. Having a policy will mean your loved ones will be able to maintain their current standard of living if you die unexpectedly.
Types of Life Insurance Available in Utah
Because there are so many different types of life insurance policies available on the market today, almost anyone can find one that is right for them. But because there are so many options on the table, you’ll have to make a lot of decisions about what you want and need out of your policy. 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 deciding whether to purchase term or permanent life insurance, it is critical to consider if you want coverage for the long term or just for a short period of time while you have certain financial obligations. You’ll also need to think about how much you’re willing to spend. And what features you want your policy to include.
Term Life Insurance
Because of its lower premiums, term life insurance has become the more popular type of life insurance. These policies are cheaper because your policy will not cover you indefinitely. Instead, you choose how long you want to be covered. A policy’s term is usually 15 years. But you can find policies that will cover you for as many as 30 years or as little as one year. If you die while the policy is still in effect, your beneficiaries will receive a tax-free death benefit.
Term life policies are solid, straightforward choices, especially since, in most cases, your premiums will not change for the entirety of your policy’s term.
There are several types of term life policies available, including:
Level Term
With level term life insurance, the death benefit and your premiums are both fixed and do not change. The majority of people opt for level term life insurance policies.
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 each year. But your premiums will most likely be higher each time you do.
Increasing Term Life Insurance
The value of the death benefit of an increasing term life insurance policy gradually increases over the course of the coverage period. For example, the value of the death benefit might increase by 5% each year. Unlike with other types of term life, there is a chance that the cost of increasing term insurance premiums will fluctuate throughout the policy’s term.
Decreasing Term Life Insurance
The death benefit associated with decreasing term life insurance gradually decreases, but the premiums stay the same. This type of policy is often purchased for coverage while repaying a mortgage or other loan. The value of the death benefit decreases as the loan is repaid.
Return-of-Premium
With return-of-premium (ROP) insurance, your premium payments will be reimbursed if you don’t pass away prior to the expiration date of the policy. Many people find the return of premiums to be appealing. However, it’s important to note that the cost of ROP policies is significantly higher than that of other types of term life.
Permanent Life Insurance
Permanent life insurance differs from term life insurance in a few significant ways. First, as long as you continue to pay your premiums on time, your permanent life insurance policy will remain in effect for the rest of your life. Next, your policy will usually include a type of savings account that accrues interest and can be used to borrow against or to pay your premiums. Finally, because of these features, premiums are usually higher for permanent life policies than they are for term life policies.
There are numerous permanent life insurance policies to choose from, 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
Universal life policies give you a lot of flexibility. You will be able to change both the value of the death benefit as well as the amount of your premium payments with these policies. You can lower your premiums by either using the cash value you accrue. Or by choosing to lower the value of your death benefit.
Indexed Universal Life Insurance
The cash value of an indexed universal life (IUL) policy, like that of other permanent life insurance, accrues interest. But you have the opportunity to earn more interest with IUL, since your cash value can be invested in a stock index. IUL premiums can be adjusted in the same way that universal life policy premiums can. They can increase or decrease in tandem with the cash value of the policy. Eventually, you may not have to pay a premium because the cash value will cover it all.
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. And the premiums, like those of traditional universal life insurance, can be changed. Variable universal life insurance policies include investment subaccounts that allow the cash value to be invested. The subaccount structure is similar to that of a mutual fund. So, you have an opportunity to make money if your stocks do well.
Final Expense Life Insurance
A final expense policy is a type of whole life insurance that pays out a small death benefit, typically $2,000 to $35,000. This death benefit is intended to cover final expenses such as a burial, cremation, or funeral service. Your beneficiary, though, will be free to spend the death benefit money however they see fit. Such as on a vacation or to pay their taxes.
These types of policies do not require a medical exam and can be obtained easily. So, one might be a good option for you if you’re worried about not qualifying for a traditional life insurance policy. You should be aware, though, that these policies can be a bit expensive, considering their small payouts.
Utah 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, the primary regulating force behind the insurance industry in the state of Utah is Title 31A of the Utah Code. But other legal provisions have also been adopted as consumer protection laws. The Utah Insurance Department regulates the insurance industry in the state.
The following are the most important rules that may apply in your situation:
Free Look Period
There is no “free look period” required by law in the state of Utah. Most states require life insurance providers to provide new policyholders with a trial period during which they can cancel their policy at any time and receive a full refund. Known as a free look period. But check with your life insurance provider. Since many still allow their customers to exercise their right to a free look period.
Grace Period
The state of Utah mandates that policyholders be given a grace period if they miss a premium payment. You will have 30 days to make up for a late payment before your insurance company can cancel your policy.
Benefit Guarantee
If your Utah life insurance provider goes out of business, the Utah Life And Disability Insurance Guaranty Association will still back your policy. This organization was formed to protect consumers like you from losing your investment due to the insolvency of an insurance company. To be eligible for this assistance, you must be current on your premium payments. And your insurer must be legally licensed to sell life insurance in the state of Utah.
The Utah Life And Disability Insurance Guaranty Association will pay you up to $300,000 in lost death benefits and $100,000 in lost cash value. These are the absolute maximums for each person, no matter how much your policy was worth, or how many policies you have.
Settlement Timelines
The state of Utah allows each life insurance company in the state to establish its own policies regarding claim payment procedures. Check with your life insurer to see what their policy is regarding claim payment timeliness. While there is no statewide provision, as in other states, requiring claims to be paid within 30 or 60 days, most insurers have policies that will not allow claim payments to take too long.
The Cost
The cost of your premium can be influenced by a number of factors. Including your age, current health, and even your gender. Contact one of our EZ agents for the most accurate information on potential costs. Simply give them some basic information and they will be able to use that information to find you free quotes that are tailored to you. But to give you an example of premium prices, a 25-year-old man in good health who does not smoke could pay anywhere from $19 to $53 per month for a 20-year policy with a total value of $764,000 in Utah.
Utah Life Insurance Resources
In Utah there are several resources in place to help you if you have any problems with your insurer or policy. These resources include:
- Utah Life & Health Insurance Guaranty Association – Before you commit to a life insurance provider, ensure that it is a member of this association. This protects your investment and ensures a payout under the terms of the policy.
- Utah Insurance Department – The Utah Insurance Department is committed to consumer education; you can contact them by phone or email to ask questions or check the status of an insurance provider’s license. Their website includes a beginner’s buying guide, a complaint form, and an insurance company lookup tool.
- S&P Global Ratings – This organization will help you check the creditworthiness of potential life insurance companies. This is one way to assess the company’s financial strength. The stronger it is, the more likely it is to pay claims and help you to grow your cash value.
FAQs
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Does Utah 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 Utah?
There are a lot of good ways to get life insurance in Utah. At the top of the list are Northwestern Mutual, Pacific Life, Sammons Enterprises inc., Lincoln Financial, and New York Life.
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How much does life insurance cost in Utah?
There are many things that can change how much life insurance costs, but here’s an example. A 25-year-old woman in Utah who is in good health and wants a 20-year term policy that costs $764,000 and lasts for 20 years will pay an average of $29.96 per month for it. On the other hand, a healthy 25-year-old man will pay about $29.69 for the same policy.
EZ Can Help!
We at EZ understand that you want the best for your family without breaking the bank. But we also know that finding the right policy for you can be tough. So, we make every effort to simplify the process of purchasing life insurance for you. And we 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.
