Frequently Asked Questions

Life insurance is a contract between you and an insurance company. You pay regular premiums (monthly or yearly payments), and in return, the company promises to pay a sum of money to your chosen beneficiaries when you die. This money can help your family pay for expenses like funeral costs, mortgage payments, or daily living expenses.

You might need life insurance if other people depend on your income or if your death would create a financial hardship for your family. Common situations include: having children, having a mortgage or other debts, being the main breadwinner, or wanting to leave money to loved ones. If no one depends on your income, you might not need it.

A common rule of thumb is 10-15 times your annual income, but the right amount depends on your specific situation. Consider: your debts (mortgage, car loans, credit cards), your family's living expenses, your children's education costs, and final expenses (funeral, medical bills). Many people use online calculators or work with an agent to figure out the right amount.

Term life insurance covers you for a specific period (like 10, 20, or 30 years). It's usually cheaper and simpler. If you die during the term, your beneficiaries get the money. If you don't, the policy ends and you get nothing back. Whole life insurance covers you for your entire life and builds cash value you can use later, but it's more expensive. Think of term as renting and whole life as buying.

The cost depends on several factors: your age (younger is cheaper), your health (healthier is cheaper), the amount of coverage (more coverage costs more), the type of policy (term is usually cheaper than whole life), and your lifestyle (smokers pay more). A healthy 30-year-old might pay $20-30 per month for $500,000 of term life insurance, while a 50-year-old might pay $100-150 per month for the same coverage.

Many life insurance policies require a medical exam, especially for larger coverage amounts. The exam is usually free and done at your home or office. However, you can get no-exam policies (also called simplified issue or guaranteed issue), but they're typically more expensive and offer lower coverage amounts. The exam helps the insurance company set your premium based on your health.

If you stop paying your premiums, your policy will lapse (end) after a grace period (usually 30 days). Once it lapses, you lose your coverage and your beneficiaries won't receive any money if you die. Some permanent policies have cash value that can be used to pay premiums, but term policies will simply end. You may be able to reinstate a lapsed policy, but it depends on the company and how long it's been.

Yes, you can usually change your beneficiary at any time by contacting your insurance company and filling out a form. This is important to do after major life changes like marriage, divorce, or the birth of a child. Make sure to keep your beneficiary information up to date.

Having a health condition doesn't automatically mean you can't get life insurance. You might pay higher premiums, or the company might exclude coverage for that specific condition. Some conditions are more serious than others—diabetes, for example, might increase your premium, while cancer might make it harder to get coverage. It's worth applying and seeing what options are available.

Employer-provided life insurance is convenient and often cheap, but it's usually not enough coverage on its own. Plus, if you leave your job, you typically lose the coverage. It's a good supplement, but most people need additional coverage. Consider employer coverage as a bonus, not your main policy.

Look for companies with strong financial ratings (A.M. Best, Moody's, or Standard & Poor's ratings), good customer service reviews, competitive prices, and a history of paying claims. You can check ratings online, read customer reviews, and compare quotes from multiple companies. Working with a licensed agent can also help you navigate your options.

Cash value is money that builds up inside permanent life insurance policies (like whole life or universal life). It grows over time, and you can borrow against it or withdraw it. However, taking money out reduces your death benefit. Think of it as a savings account inside your insurance policy. Term life insurance doesn't have cash value.

Yes, you can have multiple life insurance policies from different companies. This can be useful if you need more coverage than one policy provides, or if you want different types of coverage (like term for temporary needs and whole life for permanent needs). Just make sure the total coverage makes sense for your situation and that you can afford all the premiums.

Lying on your application is fraud and can have serious consequences. During the first two years (the contestability period), the insurance company can investigate and cancel your policy if they find out you lied. They might also deny a claim. Always be honest on your application—it's better to pay a higher premium than to risk losing coverage when your family needs it most.

Most life insurance policies have a suicide clause that excludes coverage for suicide during the first two years of the policy. After two years, suicide is typically covered. This is a standard industry practice. If you're struggling with mental health, please reach out for help—there are resources available.