Term life insurance is the most basic form of life insurance. It provides coverage for a specified period of time (e.g. 1, 5, 10, 15, 20, 25, or 30 years) in exchange for a specified premium. If the death of the insured individual occurs within this period of time or term period, the insurance company will pay the death benefit. If the term period expires while the insured individual is still living, the policy terminates and no death benefit will be paid.
The two main types of term life insurance policies are level premium term life insurance and yearly renewable term life insurance.
No medical exam term life insurance is a product that utilizes a simplified underwriting process and streamlined application process. The process can be completed online through our web site if you qualify. No medical exam is required, just an online health review. Coverage amounts are limited to $500,000 or less, depending on the insured’s age.
Permanent life insurance provides coverage for the life of the insured individual(s). These policies are more complex and expensive than term life insurance. They often accumulate tax deferred cash values from which future premiums can be paid or policy loans can be made. These policies typically stay in force as long as the premiums continue to be paid.
Some of the main types of permanent life insurance policies are whole life insurance, universal life insurance and variable life insurance.
Your coverage need will depend on your individual circumstances. Factors you should consider include anticipated final expenses (e.g. medical bills and burial costs), living expenses for your surviving family members, any outstanding loans (e.g. auto and credit cards), the outstanding balance on your mortgage, anticipated education costs for your children, estate taxes, and business continuation expenses.
A simple way to achieve a “starting point” is to take a multiple of your annual income and adjust for the factors listed above. We recommend 10 times your annual income to start. Keep in mind that your needs will most likely change over time and what seems like enough today may not be adequate in ten years. It is usually best to purchase an amount you can afford while at the same time considering future needs.
Most insurance companies will allow a certain multiple of your annual income based on your age and are usually flexible if you can demonstrate other needs. The amount you choose is up to you for the most part; however, you will need to justify amounts over and above a company’s income multiple guidelines.
For assistance choosing your coverage amount, please visit our Life Insurance Needs Estimator
Your coverage length will depend on your individual circumstances. Factors you should consider include your age, your spouse’s age, your children’s ages, the length of your financial obligations (e.g. mortgage and student loans) and the number of years until retirement.
You will want to choose a term period that covers all of the above factors. For example, if you have a five-year old child and you wish to support that child through college and perhaps graduate school, you may need a policy term period of 20 years or more.
No, your premium rates are guaranteed to remain the same during the entire term period. These are called fully guaranteed or level term policies and they are the only type of term life insurance policies we offer.
It is certainly possible, but not guaranteed. Your final rates will be determined by the insurance company through a process called underwriting. Underwriting includes a review of your current health status, medical history, family history and driving record among other things.
Underwriting will determine your final rating class, which will establish your final premium rates. Your rating class may or may not be the same as that quoted on our Web site. With your assistance, we provide the most accurate quote possible up front.
The life insurance policy will terminate at the end of the term period. However, you may have the option to renew the policy on an annual basis without providing evidence of insurability. The cost to renew annually will most likely be much higher than the previous guaranteed premium rates were, but it may be a valid option for individuals who find themselves uninsurable due to injury or illness.
The policy rating class is the risk category which an applicant qualifies for according to an insurance company’s underwriting guidelines. Common rating classes are Preferred Plus (also called Super Preferred), Preferred, Standard Plus, Standard and Substandard. The policy rating class will determine the premium rate for the policy.
The payment mode is the term of premium payments for a life insurance policy. Available modes are annual, semi-annual, quarterly and monthly.
This is because insurance companies build in a charge or ‘factor’ for all modal premiums to cover their cost of billing administration. For example, the quarterly mode requires four billing cycles in a year whereas the annual mode requires only one. The additional charge in the quarterly payment mode helps to cover the extra costs associated with extra billing cycles.
First you must complete the application form and submit it for review and processing. You will then receive a copy of your application via Email with instructions on how to e-sign and return the application. The next step is to complete your paramed exam with our third party examination company, Portamedic.
Once the exam results are received by the insurance company, they will be matched to your application and submitted for underwriting review. This review can be as short as a few days or as long as several weeks, depending on your individual circumstances. For example, if you have medical history that underwriting wants to review, medical records may be ordered from your physician(s). Depending on how quickly your physician(s) respond to the insurance company’s request will determine how long your application stays in underwriting.
Once underwriting is completed, the insurance company will make an offer on your policy and send the application to policy issue. Your policy will then be issued and mailed to us. We will process your policy as soon as it is received and mail it to you. At that point, a licensed representative will assist you with any policy questions you have as well as appropriate policy changes.
If underwriting assigns a rating class different from the class you applied for, we will work with you to determine the best course of action. This can include changing the terms of your policy to reduce the premium or challenging the insurance company’s findings.
Licensed sales representatives are available to assist you with your application forms. You can call us directly at (800) 418-1783. Upon submitting your request for an application, you will be assigned to a representative who will contact you within a few days of receiving your request.
All of our partner insurance companies require a basic paramed exam in conjunction with a life insurance application. A third party medical examiner will contact you within one business day of your completed application. They will work with you to arrange your exam at a time and location most convenient to you. The exam takes only about 30 minutes and there is no cost to you for the exam.
A basic paramed exam includes the following:
- Height/weight measurements
- Blood pressure readings
- Heart rate readings
- Urine sample
- Blood sample
- Medical history questionnaire
Please remember these suggestions as you prepare for your paramed exam:
- Schedule the exam for a time when you will most likely be able to keep the appointment. If the length of your work day varies, try scheduling the exam early in the morning, on a day off, or a weekend.
- Fast for a period of at least 8 hours prior to the exam, preferably 12 hours if possible. This will result in more accurate blood test results.
- If you are an occasional cigar smoker, refrain for as long as possible prior to the test. Increased nicotine levels in your urine will most likely qualify you for tobacco/smoker rates. Of course, you will need to disclose your smoking habits on your application as well.
Depending on your specific circumstances (e.g. age, amount of insurance, medical history, etc.) the insurance company may require additional testing or information. These requirements do not apply to all applicants. Other requirements that may be included are:
- Chest X-ray
- Treadmill Test
- Attending Physician’s Statement
- Medical Records
- Motor Vehicle Report
The length of the process depends on many factors, but you can generally expect to receive your new policy 4-6 weeks after submitting your application.
An applicant’s financial information is among several factors used to determine the amount of insurance the company is able to issue to an applicant. This information is required by ALL insurance companies as they must justify the coverage amounts of all policies they issue.
Income multiples are one method of calculating coverage amounts, which is why annual income is required. Net worth helps insurance companies develop a picture of the family’s overall financial position and potential loss in the event of the insured’s death.
A common misconception among insurance consumers is they can purchase any amount of life insurance they desire, regardless of financial considerations. This simply is not the case. All insurance companies use financial information to determine allowable coverage amounts. This is done to control fraud and limit excessive insurance situations.
Consumer protection laws exist to prevent the occurrence of unnecessary policy replacements in the insurance industry. Each state has enacted laws to protect its residents and, therefore, regulations and required forms vary by state.
We are required by law to determine if a replacement transaction exists with every application we process. Please read the following definition of a Replacement Transaction:
A Replacement Transaction occurs when an applicant intends to discontinue an existing individual life insurance contract or annuity contract upon the purchase of a new life insurance contract. This does not apply to group coverage as may be provided by an employer, whether the applicant contributes to the premium payment or not. It also does not apply to a contract that is paid for by an employer.
If your application is determined to be a replacement transaction by the above definition, you will have additional forms to complete. Please provide all requested information on these forms pertaining to your existing coverage. This information is required by law and will help speed the application process.
If your application is not determined to be a replacement transaction by the above definition, you may still have a form(s) to complete, depending on the laws of your state.