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What is Insurable Interest in Life Insurance?

When many people think of life insurance, they think of purchasing a policy that will benefit their loved ones after they pass. But have you ever considered purchasing a life insurance policy on another person who you are financially dependent on? If you buy a policy to insure another person’s life that means you will be the beneficial owner, and will receive the benefits after the insured person dies; in order to purchase a policy and get the benefits, though, you will have to prove an insurable interest in, or financial dependency on, the insured person. Before you decide to buy a policy, you need to understand what insurable interest is, and know how you will have to prove it.

What Is Insurable Interest?

african american man and woman looking at each other — *You can take out a life insurance policy on a loved one as long as you can prove insurable interest.*

When it comes to purchasing life insurance, you can’t take a life insurance policy out on just anyone: if you want to buy a life insurance policy on someone else and be considered the beneficiary, you have to be able to show an insurable interest in that person, which means that you would experience a financial loss or other hardship in the event of that person’s death. A good example of people with insurable interest in each other would be spouses wanting to protect themselves from loss of income, or business partners wanting to protect their business from financial loss.

Proving Insurable Interest

Before a life insurance company will allow you to purchase coverage on another person, they will take steps to verify insurable interest, which will usually include requesting identification from the people involved and conducting a phone interview. During this phone interview, the insurer will ask about the relationship between the beneficiary and the insured, because you can only take policies out on certain people. Relationships that guarantee insurable interest are:

Certain essential employees– You can prove that you have an insurable interest in employees who are considered executives, such as the CEO or president of your company, or your business partners, because if they were to pass away your business would experience a loss of profits. Purchasing what is known as business life insurance is common practice.
Immediate family members– It is easy to prove insurable interest in parents, children, siblings, grandparents, and spouses.
Debtors– Creditors can ensure debtors, as long as the debtor consents to the coverage.

Other Relationships

extended family silhouettes with a city background — *Normally extended family members cannot claim insurable interest unless they have proof of dependence.*

As stated above, insurable interest is easy to prove for immediate family members and people who you have a business relationship with; it is harder to prove an insurable interest in other people and, unless you have proof of financial dependence, you will have a much harder time insuring:

Aunts and uncles
Cousins
Nieces and nephews
Stepchildren and stepparents

Insurable interest protects the insured, as well as the insurance company, from insurance fraud, so when applying for a policy, you will have to prove your relationship to the insured, and that you are at risk of financial loss if the insured passes away.

If you are looking for a life insurance policy, either for yourself or someone that you are financially dependent on, know that there are many different kinds of policies to choose from, like whole life insurance, term life insurance, and final expense insurance. If you’re not sure where to begin looking for a policy, consider using online tools, or speaking with an agent. The right policy for you is out there! We have provided the top insurance companies that offer life insurance policies below; each can give you hassle-free assistance and the most competitive rates in the nation. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

How To Reinstate A Lapsed Life Insurance Policy

Forgetting to pay a bill can happen to anyone. It might even happen to you with your life insurance premiums, but it is important to be aware that missing payments can lead to the cancellation of your policy, and would leave your loved ones with nothing should something happen to you. If you are struggling to pay your bills and have neglected your life insurance premiums, have no fear! There is a way to reinstate a lapsed life insurance policy so your family is not left financially vulnerable.

What Happens When Your Life Insurance Lapses

calendar with the number 31 on it — *Most life insurance companies offer policyholders a 30 or 31-day grace period, but after that your policy will be lapsed.*

If you fail to pay your life insurance premium for a month, you won’t lose your policy: most life insurance companies offer policyholders a 30 or 31-day grace period after payment is due. Your policy will still be active during the grace period, so if you were to pass during this time, your beneficiaries would still receive the payout. Some insurance companies, though, will subtract the missed monthly premium payment from the death benefit.

You might even be able to go beyond a month without making a payment, depending on your policy:

Term life insurance policies have a 30 to 90-day grace period.
Permanent life insurance policies will allow you to go longer without making payments if you have built up cash value, which you can use to help cover premium payments.

If you go beyond your grace period, or you do not have cash value to cover your payments, your policy will lapse and you will no longer have coverage, which means the insurance company will not pay a death benefit to your beneficiaries when you die.

How Long Do You Have To Reinstate Your Lapsed Policy?

Depending on how long ago your life insurance policy lapsed, you may or may not be able to reinstate your lapsed policy. In most cases you can reinstate your life insurance policy within a certain time frame if you start making the premium payments again, including the ones you missed. Reinstatement procedures vary depending on how long ago the policy lapsed; for example, if your policy has been inactive for:

30 days or less: Most companies will allow you to reinstate your policy without any underwriting or medical questions. You will need to call your insurance company, fill out a reinstatement application, and pay your missed premiums.
30 days to 6 months: Most insurance companies will require you to answer a few health questions when filling out the reinstatement application. They will ask if there have been any changes to your health since the original policy was approved, and they could deny the reinstatement based on your new health status.
More than 6 months: Most insurance companies will require you to pass the underwriting process again.

Steps To Reinstate Your Policy

hand filling out paperwork — *To reinstate your policy, call the company as soon as possible and begin filling out the necessary paperwork.*

In order to reinstate your policy you must:

Contact your insurance company and ask how much you owe them.
Fill in all the paperwork and submit it to your insurance company.
Pay past due premiums along with any penalty/interest the insurance company might require you to pay.
Make sure that all of your future premium payments are made so you can prevent your policy from lapsing again.

Avoiding a Life Insurance Lapse

The best way to prevent a life insurance lapse is to:

Set automatic payments so that the premium is automatically deducted from your account every month.
Use your cash value to help cover premiums if you are having financial difficulties.
Switch from annual to monthly premium payments to help spread out what you owe, instead of paying one big lump sum.
If your policy does lapse, reinstate it immediately so it will be less expensive and you will not have to go through the underwriting process.

If something were to happen to you, your family would be facing emotional hardships, as well as financial ones. Life insurance is a great way to help your loved ones with those financial hardships, because the money they receive will help pay for expenses related to your death, and any other debts or bills they have. If you make the decision to get life insurance to protect your family, they will be taken care of, but you need to be sure that you continue to make your monthly payments. If you fail to make payments, the lapsed life insurance policy will be considered null and void, and your family will not receive any benefits.

If you are in the market for a life insurance policy, or need a new one because you cannot reinstate your old one, you have options. There are many different kinds of life insurance policies to choose from, including whole life insurance, term life insurance, and final expense insurance, so if you’re not sure where to begin, consider using online tools, or speaking with an agent. The right policy for you is out there! We have provided the top insurance companies that offer life insurance policies below; each can give you hassle-free assistance and the most competitive rates in the nation. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

Covid-19 and Life Insurance Coverage

The events of the past year and a half, during which we tragically lost so many people to Covid-19, have prompted many people to think more about preparing for the unexpected. After all that has happened, you might be thinking more about life insurance; for example, you might be wondering if a policy will still deliver death benefits if the policy owner dies from Covid-19, or if insurance companies have changed their policies, meaning you’ve missed your opportunity to buy life insurance. So how are insurers handling Covid-19? Do they cover deaths from it? And has the pandemic affected how they are selling policies?

Can I Get Life Insurance?

Life insurance is important because it offers financial protection for your loved ones if you pass away unexpectedly – it’s no wonder, then, that so many people have realized during the pandemic how important purchasing a policy is. In fact, application activity for U.S. life insurance was up nearly 8% year-over-year in 2020 among people under age 44, according to MIB Group’s Life Index. And there’s no need to worry: you can absolutely still purchase a life insurance policy – and thankfully rates have not been not impacted by Covid-19! With that being said, though, there are a few exceptions to be aware of.

What If…

I’ve Been Overseas Recently?

Because of uncertain pandemic conditions in other countries, some insurance companies will postpone your application approval if you have recently traveled internationally. They will also postpone your application approval if you have plans to travel abroad, or if a member of your household has recently returned from travel outside of the U.S. Generally, if you have traveled overseas, you can submit your life insurance application 30 days after the date you returned to the U.S.

If you do not disclose any international travel or plans on your application, your insurance company can deny claims to your beneficiaries.

I Have Covid-19?

Each company will treat your application differently if you have or have had Covid-19, but in most cases insurers will postpone your application for 90 days, or until you have made a full recovery, if you are currently sick. Depending on the severity of your symptoms, though, some insurance companies could postpone your application for up to six months; in addition, if you – and others – suffer from long-lasting effects of the virus, life insurers will incorporate that information into their underwriting standards, which could affect the cost of coverage for Covid-19 survivors in the future. The most important thing to remember, though, is that you need to be honest on your application about having the virus: lying about it will automatically mean that your beneficiaries will not be able to collect your policy’s death benefit.

I Die From The Virus?

Traditional life insurance policies, such as whole and term life, will likely cover deaths from Covid-19, according to spokespeople from industry research group LIMRA, State Farm, and Farmers New World Life.

Your life insurance claims will be paid out, even if you pass away from the virus, as long as you:

Were approved for a life insurance policy, either before or during the pandemic.
Did not omit information or lie on your application.
Paid your insurance premiums and did not allow your policy to lapse.

The Covid-19 pandemic has been hard on many Americans, and the death toll in the U.S. has caused many younger Americans to worry what would happen to their families if they were to pass. The sad reality that many people have passed away unexpectedly from the virus, and have left their families unexpectedly, has put a new perspective on the importance of life insurance.

Remember, you can still purchase a life insurance policy and financially protect your family, as long as you are honest during the application process. If you’re looking for a policy and are unsure where to begin, work with an agent who specializes in life insurance; this is the best way to find the policy that is right for your specific needs. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

5 Types Of Term Life Insurance Policies

Life insurance is not one-size-fits-all, so insurance companies offer many different types of life insurance policies. This means you have lots of options, but it also means you’ll need to do some research to figure out which type of policy is right for you. One popular type of policy is term life insurance, because it offers a lot of coverage for a low premium: term life insurance premiums can be around $30-$40 per month for a 30-year, $500,000 policy as long as you’re young and healthy.

What makes these policies different from other types of life insurance is that, with term life, you choose how long you want your policy to cover you for, which can be anywhere from 5 to 30 years. This makes term life insurance perfect for families who have major expenses, such as a mortgage, other loan debts, or car payments: these policies will provide coverage while you’re paying off those debts, as long as you keep paying your premiums. If you’re interested in a policy like this, you’ll need to know the 6 different types of term life policies, and consider which is best for your family.

1. Guaranteed Level Term Life Insurance

illustration of an open padlock with an arrow pointing down to lock it — *Guaranteed level term life insurance will lock in rates throughout the whole policy.*

This is the most common type of term life insurance. It’s a simple, solid choice: with this type of policy, your premiums will never go up during the life of the policy (typically 10, 20, or 30 years), and your death benefits will never change. Most policies have a renewal clause, but you are not guaranteed the ability to renew the policy – it depends on the wording of the policy, so you’ll need to speak to an agent and make sure the policy is renewable if that’s an important feature for you.

2. Return Of Premium Term Life Insurance

With some term life policies, no benefits are paid out if the insured lives past the term of the policy, but with return of premium term life, if the insured lives past the term, the premiums that have been paid over the years are returned. For example, if you have a 20-year return of premium policy and survive the policy, you will get back all of the premiums you paid at the end of the 20 years, as long as you kept up with your premium payments throughout that time. These policies typically have 15, 20, or 30 years terms, and are generally a little more expensive than other term life policies, because you or your beneficiaries will receive some sort of payout no matter what.

3. Annual Renewable Term Life Insurance

This is a short-term life insurance policy that can be renewed each year for a specific period of time. It is important to note that every time you renew the policy, the premium will go up, and will increase even more after you have hit the 20 or 30-year mark.

4. Modified Term Life Insurance

Premiums for these types of term life insurance policies change over time, usually in 5 or 10-year intervals. For example, if you start out paying $10/month for your policy, the premiums might increase to $17/month in 5 years, and so on. If you don’t have a lot of money in your budget for life insurance right now, but think you will have more money for a policy in the future, this type of policy might be the right choice for you; you’ll be able to protect your family for a low price right now, and can plan for the future rate increases.

5. Decreasing Term Life Insurance

With these policies, your premium rates will stay the same throughout the life of the policy, but the longer you have the policy, the less your death benefit will be. Policies can last anywhere from 5 to 30 years, and each year that you have the policy, your coverage will decrease by a certain percentage of the original payout, typically 4-5%, depending on the insurer. These policies are cheaper than permanent life insurance policies with similar coverage, so if you’re looking for a good price on life insurance, and think that you will have fewer debts in the future or will be more financially stable, this plan might be perfect for you.

Which Is Best For You?

One thing is certain: you need life insurance to protect your family financially and prevent them from struggling in your absence. But there isn’t one policy that is right for everyone, so you’ll have to consider how much debt you have, how much debt you will have in the future, as well as how financially stable you are now and expect to be in the future. All of this, on top of researching each type of policy, can seem like a lot, so your best bet is to use online tools and work with an agent who can help you compare different policies from different insurance companies. We have provided the top insurance companies that offer life insurance policies below; each can give you hassle-free assistance and the most competitive rates in the nation. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

Questions To Ask Before Buying Life insurance

When it comes to life insurance, there are two things that you can be sure of: you need it in order to ensure your family’s financial stability in the future, and you have a lot of decisions to make when choosing a policy. It takes a lot of thought – and it should: it’s a big, important commitment. So if you’re unsure how to narrow down your choices, and how to decide which policy is right for you, you should first ask yourself the following questions; having the answers in your mind can make the process of comparing life insurance policies and buying the right plan much easier.

How Much Coverage Do I Want?

suitcase full of money stacks — *Before buying life insurance, you will need to determine how much money will be enough for your family when you are gone.*

When determining how much coverage you will need, you have to ask yourself who depends on you and what kinds of debts you have. Typically, the death benefit on your policy should equal up to 10 times your current annual income, but it is important that you take the time to write down all of your current financial obligations, such as your mortgage, childcare expenses, car payments, and any other future obligations. Will you want to leave an inheritance when you pass away? Help your children pay for college? Buy a house? All of these things will need to be taken into account when choosing your benefit amount, and the best way to calculate your life insurance needs is to get help from a trained agent who can help you determine how much coverage you will need.

How Long Should I Have Coverage For?

Once you choose the amount of coverage you need, you will have two basic types of life insurance coverage options to choose from: term and permanent.

The difference between the two is that a term life insurance policy will cover you for a specific amount of time (typically 10, 20, or 30 years), while a permanent life insurance policy will cover you for your whole life. The advantage to term life insurance? It’s cheaper, and can be a great, affordable option if you want to provide income for your family to cover short-term debts and needs. For example, do you have a 30-year mortgage that your spouse would have difficulty paying off if you die? Then a 30-year term life insurance policy is perfect to cover those 30 years until the mortgage is paid off.

If you are unsure if a term life insurance plan will provide enough coverage, look into a permanent life insurance policy, which would allow your family to live comfortably, even after your debts are paid. These policies have a cash value growth potential and can replace income, assist with your retirement planning, and more. Comparing all of your different options will give you a better understanding of which policy is better for you and your family, and how much you can afford.

How Healthy Am I?

african american woman stretching touching her foot with one hand and the other hand backwards in the air — *Ask yourself how healthy you are to get a better understanding of how much premiums will be; the healthier you are, the cheaper it will be.*

This question is important in determining which type of policy is better for you. Life insurance rates are based on multiple factors, and your health history is one of them: the healthier you are, the cheaper your premiums will be, and vice versa. But even if you do have health conditions, there is no need to worry! With a guaranteed issue life insurance policy, such as simplified issue life insurance, you will not be turned down because of your health; you will not have to answer medical questions, or undergo a medical exam.

Will Premiums Change Over Time?

This depends on which kind of coverage you go with. With term life insurance, your premiums start out lower than with permanent coverage and stay at a fixed rate for the term, but if you choose to extend your policy, your rates will go up. With whole life insurance, as long as you don’t let your policy lapse, your premiums are guaranteed not to increase for the rest of your life. If you choose to go with a universal life insurance policy, your premiums will increase with age, but if you have accumulated cash value, this can cover the increases. These are all things you will have to consider and compare when researching life insurance policies.

What Happens If I Don’t Die During A Policy’s Term?

If you opt to get a term life insurance policy, there is a good chance that you will survive the specific term, and if you do not pass away during the term, no one receives the death benefit. You do have the option to keep your policy and convert it into a whole life insurance policy, but you need to be aware that your rates could go up, especially if you develop health conditions. This is why it is important to consider from the start if a term life insurance policy is your best option, or if a permanent life insurance policy is better for your circumstances.

Choosing the right life insurance policy is necessary in order to ensure that your family gets the benefits they need. It might seem complicated and frustrating to find the right one, but it can be done, with some help. The best way to find the right life insurance policy for you and your specific needs is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

Before Getting Married, Discuss Finances & Life Insurance!

Congrats on your engagement! You’re probably busy planning and making arrangements for the big day, but during this fun (and stressful!) time, don’t forget that there is something very important you need to discuss before getting married and sharing your life together: finances. Before making the commitment to forever, you should be clear about what debts and assets you have; once you’ve done this, there’s one more very important thing to talk about, and that’s life insurance. We get it, it’s not the most romantic subject to talk about before tying the knot, but you definitely need to discuss how much life insurance you’ll need to ensure your family’s future financial stability. To make things easier, consider the following so you can figure out what kind of life insurance you’ll both need.

Debts You’re Bringing To The Marriage

illustration of a woman holding a large bag with a money symbol on her shoulders — *Before getting married, it is important to discuss any debts, and other finances you have with your fiancé.*

You’d probably agree that being open and honest with your partner is very important, right? Well, that includes being open with your soon-to-be spouse about any key financial information; in fact, roughly 42% of couples say transparency about finances is key to a healthy relationship. This is especially true when it comes to any debts that you will be bringing into the marriage, including credit card debt, student loans, or car payments.

If you both have an understanding of what debt you’ll be taking on before getting into the marriage, you’ll be better equipped to come up with a plan to tackle that debt; you’ll also know how much life insurance coverage you’ll both need to keep you financially protected in the future. Remember, if one of you were to pass away, the other could be responsible for some of those debts, so take them into consideration when choosing your policy. You will want to make sure that in the event of your passing, you can still help cover these debts and provide enough for other expenses.

Are You Planning On Having Children?

Do you want to have children someday? Does your partner? If the answer is yes, a lot of other questions will follow, like: Will you be buying a house one day as your family grows? Would you be able to continue taking care of your children on your own if your spouse passed away? Do you plan on helping your children with college expenses? You will need to discuss these questions and figure out how much life insurance coverage will be enough to cover any or all of the scenarios raised above.

Evaluate Your Disability Insurance

blue and white disability sign — *If your job does not cover disability in case you get injured and unable to work, you can get a disability rider with life insurance.*

In the event that you or your spouse got hurt or disabled, would the disability insurance offered through your job cover your bills? Odds are it would not; in fact, more than half of working Americans could barely afford their bills past the first month of being unable to work. You will both want to be financially protected if the unexpected happens and you are no longer able to provide an income; life insurance disability riders can help you or your spouse keep paying the bills by covering any lost income.

What Kind Of Life Insurance Policy Should You Get?

You have options when choosing a life insurance policy/policies to cover your new family. One thing to consider is whether you plan on having your own life insurance policies or a joint life insurance policy; joint life insurance policies cover both of you, and are generally less expensive than purchasing two policies. If you decide on a joint policy, you have two options: a first-to-die policy, which provides benefits to your spouse after one of you dies, and a second-to-die policy, which pays out benefits to your family after you both have passed. Be aware that after the first-to-die policy’s benefits are paid out, the policy terminates, meaning the surviving spouse would have to get additional coverage if they want to provide benefits for the rest of your family after they pass.

Individual life insurance policies might be a better fit if you want guaranteed protection for each individual; you might also be able to get higher payout benefits when getting your own life insurance policies. The best way to determine which is the best route is to go over your finances and compare plans. You might find that a term life policy is better for your needs, while your spouse might decide on a permanent life policy. Whatever you both choose, it is important to have life insurance for the unexpected, so that neither of you is left struggling.

Talking about your finances before getting married might not seem fun when you are in love and enjoying the good times, but it is necessary, and avoiding the subject will be detrimental to your relationship in the long run. You need to know how much debt you each have and what your future plans are for taking on more debt, so you can figure out exactly how much life insurance coverage you’ll need to protect your family now and in the future. After having the talk, the next step is determining which life insurance policy will best fit your finances and needs; the best way to do this is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

Tag: term life insurance