Life Insurance Facts

1. When does my insurance coverage start?

Your policy will begin once it has been issued and then signed and accepted by you and your first payment sent to the insurance company.

1. Is the Insurance Company allowed to cancel a policy because of health issues or for other reasons?

After a policy has been issued it cannot be canceled. However if an individual is later discovered to have been less than truthful on their application, then the insurer is within their rights to reverse or cancel the policy. For this reason it is of the utmost importance that you are completely candid when applying for life insurance.

1. What is Term Life Insurance?

This type of  life insurance policy is the cheapest available. It offers only insurance with no cash sum upon completion. It is popular with young families and those with large debts. It can be possible to convert this type of policy to a permanent life insurance policy at a later date. Term life insurance only benefits your dependents. Many people will buy term life insurance and then invest the money saved in a more lucrative savings plan. It is the opinion of many that permanent life insurance is not good value for money

4. What is Permanent Life insurance?

As noted above this type of policy is more expensive as it offers a cash sum at the end of the term as well  as  a death benefit. It is possible to withdraw or borrow against the cash reserve, the amount of which is based on the cash value if you surrender the policy before its maturity or your death.

5. If I have group life insurance at work should I buy more?

It is always advisable to have your own policy which you can control. Of course if you leave your job for any reason your cover will be discontinued.

6. How much life insurance do I need?

This depends on what you think your families needs would be in the event of your premature death. Whatever figure you begin with can be increased at a later date if you so require. An often used rule of thumb is seven years of your current income, but a professional can help you arrive at  a more precise figure.

7. Can I buy life insurance if I have health problems?

Yes, but you may be charged a higher premium depending on the details of your condition. However there  are some conditions that may disqualify you. You should consult with your insurance company as each case is unique and will be treated differently.

8. How much will life insurance cost me?

How much will life insurance cost me? This is a question asked by many.Again, this is different for everyone and is based on a variety of factors including; age, sex, health condition including height and weight. Other factors also considered are occupation and lifestyle (smoker/non-smoker) etc. Generally paying annually rather than monthly will be cheaper for all policies.

9. Why should I buy life insurance if I am single?

Even if you do not have dependents there are things such as burial costs to consider. There is also the possibility that you will have a family at some point in the future and taking out insurance whilst you are young is always cheaper than waiting until you are older.

10. What Type of Policy Should I Buy?

This, again, will depend on your individual circumstances, but Suze Osman, the celebrated money expert says;

“THE ONLY TYPE I LIKE – FOR THE PURPOSES OF INSURING YOUR LIFE – IS TERM INSURANCE!”

If you are sensible with your money and deal with mortgage, car loan and credit card debt and make financial plans for your retirement, you will not need insurance to help your family 30 years from now.

11. Will Life Insurance Benefits be Paid after Suicide?

Most policies will not pay if the suicide occurs within two years of the start of the policy. However you should always check the clauses on each individual policy you take out.

12. How does divorce affect my life insurance?

This will depend on how you set your policy up at the beginning – you may want to change the beneficiaries to life insurance policies depending on who was had named in your policies. You may also want to increase your present coverage, or indeed start a policy if you have become the sole breadwinner.

13. Will I require a Medical examination to get life insurance?

Yes. Some companies offer life insurance with no medical requiring you to answer only a few questions about your state of health. However for policies in which large sums of money are at stake you will be required to undergo a short examination which will include; a blood and urine sample, blood pressure, height and weight, medical history and details of your family medical history.

14. Under what circumstances will coverage stop?

Your policy will be at risk of cancellation if you cease paying your premiums or if you are found to have submitted false information, or omitted something important on your application.