Life Coverage
Life insurance is a way to make sure your family can continue to support themselves financially after your death. This coverage pays a specific sum of money upon the death of the policyholder to the named beneficiaries.
FAQs
What is a Beneficiary?
Beneficiaries are the individuals who will receive the benefit in the event of your death.
When does coverage become effective?
Coverage will not become effective until your evidence of insurability is approved by the insurance company. The insurance carrier may request copies of your medical records, perform in-person health screenings, review your credit history and run criminal background checks to make this determination.
Are there policy limitations?
Policies may limit or exclude coverage for inherently dangerous activities like rock climbing or flying in a privately owned aircraft. Most policies exclude suicide.
How much life insurance do I need?
Determining how much life insurance coverage you need depends on variety of factors. In general, you’ll want to consider other sources of income your beneficiaries have, your debts, your savings and your monthly spending to help calculate the amount of coverage that is right for your loved ones.
Types of Life Insurance Coverage
Life insurance is typically broken down into four main categories: term, whole, universal and accidental death and dismemberment.
Term Life
Provides coverage for a specified number of years. Common terms are 10, 20 and 30 years. If you die within the policy term, your beneficiaries will receive the full death benefit. If you outlive the policy term, you can chose to renew the policy for another specific term, convert the policy to a whole life benefit or terminate the policy. This is often the most affordable type of life insurance. Premiums for this type of life insurance will vary depending on the amount of coverage your purchase and the term of the policy. Your age, gender, health and life expectancy will also be used to calculate your premium.
Whole Life
Provides coverage for your entire life, provides a guaranteed death benefit and pays the face value up to the maximum age. This type of life insurance builds cash value over the life of the policy. Part of your premium is invested in the stock market and will provide you with a minimum rate of return. One of the benefits of whole life coverage is that you can borrow money against the cash value of your policy. Due to its cash value, whole life is more expensive than term life insurance. Premiums for this type of life insurance will vary depending on the amount of your death benefit. Your age, gender, health and life expectancy will also be used to calculate your premium.
Universal Life
Combines the benefits of term and whole life coverage. The value of your policy depends on the stock market but you get to decide how to manage both your savings and earnings with this type of coverage. You can deposit money in excess or your premiums and you can add earning to your death benefit. Life whole life, universal life insurance allows you to take a loan out against the cash value of your policy. It can also allow for savings withdrawals to pay for larger expenses like a home purchase.
Accidental Death and Dismemberment
Only pays benefits if you are killed or injured in an accident. It can be purchased as a stand-alone policy or it may be combined with your life insurance. The accidental death benefit will either be a specific dollar amount or a multiple of your salary, while the accidental dismemberment benefit will vary depending on the type of injury.