Life Insurance: Frequently Asked Questions

Life insurance comes in many shapes and sizes, but the different types of life insurance policies generally fall into two broad categories:

• Term life insurance
• Permanent life insurance

The type of life insurance you should buy depends on various factors such as your personal situation, your health condition and your financial goals.

Life insurance experts suggest that you have 5 to 10 times your annual salary in coverage, but your salary isn’t the only factor in determining your life insurance needs. You need to think about how much money your family will need to cover final expenses as well as current and future financial obligations, such as the mortgage, college tuition, etc. Use our life insurance needs calculator to get a better estimate on how much life insurance you need.

Financial rating companies such as A.M. Best, Standard & Poor’s, and Moody’s and Fitch regularly evaluate the long term financial strength of life insurance companies across the country. These companies review each life insurance company’s financial balance sheets, business profiles and overall operating performance. The ultimate goal is to determine whether a life insurance company is in a secure financial situation or a vulnerable one.

A life insurance company in a secure financial situation will have a better rating. Alternatively, a life insurance company in a vulnerable financial situation has a higher risk of defaulting on its payout obligations, leaving your loved ones potentially unprotected.

The rating system is simple. Financial rating companies appoint letter grades to each life insurance company, similar to how grades are distributed in schools. For example, the best life insurance companies have an A+ rating and the more vulnerable ones have a rating below a B+. AccuQuote only represents life insurance companies with ratings of A- or better.

Temporary life insurance provides you with coverage during the life insurance application/underwriting process. Most life insurance companies give you the option to obtain temporary coverage by paying the first month’s premium payment along with your application. This will ensure that your loved ones are financially protected if you die before your policy is issued. This is often referred to as “binding.”

Keep in mind that obtaining temporary life insurance coverage is not a requirement by life insurance companies, but is highly recommended.

Also, you’re guaranteed a full refund of your first premium payment up to 10 days after receiving your term life insurance policy. So, there’s nothing risky about opting for temporary coverage. A bigger risk would be not opting for it.

Most families have coverage on both husband and wife. There are many financial pressures on a family after the loss of either parent. Beyond the obvious final expenses, the financial strain on a family can be significant, even if the deceased spouse wasn’t working.

The surviving spouse or domestic partner may need to take time off work, or change jobs in order to spend more time with the children. Therefore, your financial plan should include life insurance for both spouses/parents.

6. What do I do when someone dies?

We know how difficult of a time a family member’s death can be. Our promise to you is that we will be there every step of the way if you should ever have to collect on your loved one’s life insurance policy.

We encourage you to reach out to us.  We will:

• Explain the claims process
• Provide carrier contact information for filing a claim
• Offer guidance on proceed distribution options and
• Show you how to create a lifetime income stream from the death benefit, designed to protect present and future needs.

7. Why have life insurance rates fallen dramatically in recent years?

People are living longer, healthier lives due to the advances in medical care. This means that the risk is much lower for insurers and the need to charge high rates is unnecessary.

In addition, the health criteria to qualify for traditional term life insurance is much stricter than it used to be. Depending on the type of policy, many life insurance companies require a medical exam. The medical exam allows underwriters to obtain better information about your health and lifestyle. The healthier you are, the lower your term life insurance rate.

The internet has also had a huge effect on life insurance rates. It has allowed consumers to easily find the lowest rate which, in turn, has had an impact on competition, forcing life insurance carriers to remain competitive in pricing.

There are many life insurance quoting and brokerage firms out there, but none of them offer the same quality of service that AccuQuote does.

Like our competitors, we provide low-cost term life insurance quotes online. What makes us unique is that unlike our competitors, we are NOT a one and done quoting calculator. We provide our customers with:

• Extraordinary, personalized customer service. Just ask our hundreds of thousands of customers.
• Faster than average policy delivery
• Insurance advice and solutions for the whole family and
• A commitment to provide our expertise throughout your lifetime.

In addition, AccuQuote offers an array of other financial products that should be a part of every family’s overall financial plan.

9. What are the benefits of shopping online for life insurance?

There are four great reasons to shop online for life insurance.

1. Convenience – Shopping for life insurance has never been more convenient. You get the information and advice you need from the comfort of your own home at any time throughout the day.
2. Speed – You can get a quote in less than two minutes! After briefly talking to a licensed life insurance, you’ll get personalized advice and the application process can begin, if you choose to move forward.
3. Savings – Online life insurance quoting firms allow you to compare dozens of quotes side-by-side, finding the best values in life insurance.
4. Experience – There’s no substitute for experience. AccuQuote’s life insurance agents talk to thousands of very different customers every year. They have the proven track record to help you and know the caveats of each life insurance carrier. We also have strong relationships with underwriters at the insurance companies.  We are well equipped to help you find the best solution for your life insurance needs.

Bottom line:  Using the internet as a tool to find and obtain the best values in life insurance saves time and money.

A life insurance rate class is a category that describes certain health and lifestyle factors. Your life insurance rate is determined by the rate class you fall into. The best rate class charges the lowest rates.

Here are the most common rate classes.

• Preferred Plus – In order to qualify for preferred plus rates you cannot use any tobacco and you must be in overall excellent health with no history of drug or alcohol abuse. In addition, you must not engage in hazardous activities.
• Preferred – Generally, to qualify for preferred rates you must be in excellent overall health and you must not participate in any hazardous activities.
• Standard – Standard risks refer to people who have had some minor health impairments. Examples of someone that would qualify for standard rates include people who have elevated cholesterol levels or who are overweight.
• Substandard – This rate class encompasses people that have more than minor health problems. An additional charge will be added to these people’s premiums depending on the risk factors involved.

2. What factors affect my life insurance rate class?

Factors such as tobacco use, high cholesterol, risky activities, like skydiving or bungee jumping, and some pre-existing conditions will likely have a negative impact on your life insurance rate.

Alternatively, if you’re in overall excellent health, your life insurance rate should be very affordable.

Common conditions like allergies and asthma (depending on the severity) will usually not play a role in determining your life insurance rate. Learn more about what factors affect your life insurance rate class.

Yes. But keep in mind that smoker rates are much higher than non-smoker rates. However, some life insurance companies won’t charge extra if you only use chewing tobacco or smoke cigars occasionally.

In order to qualify for non-smoker rates, some life insurance companies require that you be smoke-free for at least one year. Most require longer periods

Yes. You may have to pay a higher premium for your life insurance but you can certainly get some type of life or accidental death insurance coverage.  If a severe medical condition is preventing you from qualifying for traditional term life insurance, you can apply for a type of life insurance that requires no medical exam.

You must have your green card and have been a permanent resident for at least a year to get coverage from most life insurance companies. We cannot provide life insurance quotes or coverage for temporary residents, including anyone with a work permit or visa, permanent residents without their green card, or applicants who have not yet received their green card.

No.

On average, the life insurance application process takes 3-8 weeks. However, there are varying factors that can speed up or slow down the process.

Can I speed up the life insurance process?

If you are applying for traditional term life insurance, you can reduce the amount of time it will take to get your policy in force by returning all of the delivery requirements on time. In addition, be sure to take the required medical exam as soon as possible to speed up the application/underwriting process.

If you’re interested in securing a policy very quickly, you may want to consider applying for a no medical exam life insurance.

In most cases, a medical exam is required in order to qualify for a traditional term life insurance policy. The insurance company covers the cost.

The life insurance medical exam is conducted by a licensed paramedic or medical doctor, at a time and place convenient for you; usually at your home or office. The exam generally involves a blood test, urine specimen, blood pressure reading, height and weight measurement, sometimes an EKG, and a series of questions about your health history and lifestyle. The whole process typically takes about 20-30 minutes.

3. What happens during underwriting?

After you’ve completed your medical exam, the life insurance company will begin to evaluate your case. This evaluation is called “underwriting.” The answers to the questions on your life insurance application, along with the results of your exam, are initially reviewed by a life insurance underwriter.

The process generally takes 3-8 weeks depending on the amount of information required for processing.

Once all required information has been received, the life insurance company will make their decision regarding whether you qualify for a life insurance policy and how much you’ll pay for premiums.

Your coverage does not begin until your life insurance policy is approved and your first premium has been paid. Most companies provide some temporary coverage during the application/underwriting process (assuming certain conditions are met).

Temporary life insurance provides you with coverage during the life insurance application/underwriting process. Most life insurance companies give you the option of obtaining temporary coverage by remitting the first month’s premium payment with your application. This ensures that your loved ones are financially protected if you die before your policy is issued.

Important: If you are replacing existing coverage, you should never drop your existing coverage until your new policy has been approved and your first premium has been paid.

Yes. If you change your mind at any time during the application process, you will receive a full refund, no questions asked. This “free look” period continues for 10 full days after your policy is delivered to you.

It isn’t required, but we strongly encourage you make your first payment along with your application in order to obtain temporary life insurance coverage during the application/underwriting process.

Unfortunately, there have been situations where customers have died before their life insurance policy was issued.  If money is not remitted with the application, benefits cannot be paid if an untimely death occurs while the application is being processed.

Remember, you are guaranteed a full refund for up to 10 days after the life insurance policy is delivered to you, so there is no risk in submitting money with an application. The real risk may be not submitting money.

Most life insurance policies offer an optional feature called waiver of premium. This “rider” typically states that, in the event you become totally disabled for a period of six months or longer, the insurance company will pay your life insurance premium until you are no longer disabled. This feature is available at an extra cost and must be chosen at the time of your life insurance application.

8. Can I pay my premiums monthly, quarterly, semi-annually or annually?

Most insurance carriers offer several payment options, including monthly, quarterly, semi-annually and annually. With the sole exception of paying your premiums annually, you will likely be charged interest. This is called the APR (annual percentage rate). The APR varies from company to company.

To make things easy, we provide an easy-to-use APR calculator. Simply plug in the numbers and you’ll be able to see whether the additional cost of paying in installments makes sense for you.

Paying premiums annually can save you thousands of dollars over the life of your policy.

E-signature allows you to apply for insurance coverage through an online transaction. This includes the use of electronic records and signatures. This paperless process provides a much faster turnaround time (10 to 15 days on average) and easy-to-follow application steps. The result is an error-free application that significantly improves your experience.

Keep in mind, not all life insurance companies offer this application process, but most of the carriers we represent do. When available, we highly encourage our customers to use the electronic application process.

Insuring your child is by far one of the easiest and most affordable ways to establish their financial foundation and future insurability while they’re still young and healthy. These policies offer up to $30,000 in life insurance coverage for children and young adults, and cost as low as $1 for the first month’s premium.

No medical exam is required. Just answer yes/no to a few medical questions and you can buy a policy over the phone, hassle-free! Once the application is approved, coverage starts right away!

The coverage is guaranteed for life, regardless of future changes in age, health or occupation, as long as premiums are paid on time.

Since your children’s coverage is a whole life insurance policy, it builds cash value that could be used for future expenses, including education, a down payment on a home or even to pay future premiums.

2. What is a life insurance policy review?

A life insurance policy review is an assessment of your current financial needs. At AccuQuote, we’ll review the terms of your existing policy and determine if you need more or less coverage if major life events have occurred since you first purchased your policy.

Here are some reasons you should consider a life insurance policy review.

• You want to make sure your family is adequately protected
• You wonder if you can find a more affordable life insurance rate
• You would like to see a term vs. permanent life insurance comparison
• Your health has changed for the better, or worse or
• You would like to learn more about exercising the conversion option that may be available on your existing term life insurance policy.

3. Should I replace my existing life insurance policy?

Shopping for a more affordable life insurance policy is a good idea, especially if you bought your policy more than a few years ago. Rates have fallen dramatically, so you might be surprised at how much you can save. But be careful. Before replacing an existing term life insurance policy make sure you closely compare your existing term life insurance policy with the one you’re thinking of replacing it with. Consider the following factors:

• Price
• Guarantee periods
• Convertibility
• Financial strength of the insurance companies
• Available riders

Understand that when you buy a new life insurance policy, a new contestability period starts (usually for the first two years).

Important: DO NOT CANCEL any existing coverage until the new term life insurance policy has been approved, paid for, and delivered to you.

Return of premium term life insurance (ROP) is a type of life insurance policy that offers a guaranteed refund of the life insurance premiums if you live longer than the term period. This type of term life insurance policy is more expensive than traditional term life insurance, but the premiums remain level over the life of the policy. They are often less expensive than permanent types of life insurance, yet, like many permanent policies, they still may offer cash surrender values if the insured doesn’t die. Return of premium term life insurance policies are available in 15, 20, or 30 year terms.

A life insurance rider, also known as an endorsement, is an addition to a policy that usually expands the benefits of the life insurance. Riders add flexibility and personalization to your life insurance policy.