Life insurance is something most of think about but don’t really think we need. Afterall, no one likes to think about the possibility of death or not being here, but the reality is that life at some point won’t go on and if we don’t prepare for this inevitability, our loved one will be the ones suffering after we’re gone. It’s already hard enough losing someone but to suffer even more when it can be prevented is something that we should spare our loved ones. We might not be able to stop emotional trauma or pain they might suffer if we’re not longer there but at least we should not leave a financial burden or cause more financial issues for our loved one when we are no longer here. The whole idea of having life insurance is to make sure that if something happens to us today, our loved one are protected. We don’t want them spending countless hours looking for whiplash settlements, serious injury attorney, personal injury or auto accident lawyers. We also don’t want them spending time worrying about claims to insurance companies or searching through a list of attorneys. They would already have a lot to deal with!
Types of Life Insurance
There are two basic type of life insurance – term life insurance and whole life insurance. For us to understand and know what questions to ask prior to getting or life insurance, we must first of all understand what each life insurance means.
Term Life Insurance – this is insurance that most people end up with because it is cheaper than the other alternatives. Term life insurance is insurance you get that covers you for a certain amount of years and then you would have to renew for another set of years. It might be cheaper but it also has the disadvantage of the fact that you when you have to renew, you might already be much older and your insurance premium might be much more expensive than if you tied in the rates earlier on. Most term life insurance run for about 10 years, but you can certainly buy for more or less years. If you don’t die during the time the insurance is active, there’s no payout and the insurance expires. Think about it as something to keep you protected in case you ever needed insurance. Most young people might not think about getting insurance at all but if you have a family or loved ones that might need taking care of when you’re gone – like spouses or children or even elderly parents – then getting a life insurance, even if it is term, makes a lot of sense. Term insurance is really suitable for most people and saves your family from searching for to find a lawyer online or looking for general practice lawyers if anything were to happen to you. They don’t need to be dealing with a claim company or claim department or list of lawyers when they should be worrying about other things.
Whole Life Insurance – this is the alternative to Term Life insurance and one that is not as popular with younger people who think they have their whole life ahead of them and would prefer not to be locked into a long-term contract for years. Whole life is generally more expensive compared to term life insurance but in the long run, it turns out cheaper as whole life insurance covers you all your life till you die without the premiums changing drastically. It’s like locking in a specific amount of premium and never having to worry about your insurance cost for the rest of your life. With whole insurance, you don’t have to worry about renewing or getting dropped if you were to get sick along the line whereas with term insurance, any sickness or existing medical history is considered at the time of your renewal and depending on what has propped up as you age – chronic diseases like diabetes, high cholesterol, high blood pressure, etc – your rate is much higher than when you started. People that get whole life insurance end up saving more down the line but that is only if they outlive the term insurance as it does cost much more to have whole life insurance. If you’re not sure which way to go, ask for a free consultation with a few insurance companies and if needed, look for an attorney directory database or a lawyer listing site and contact an attorney to help you.
So, before you decide on which life insurance to buy or even decide on if you want any life insurance, you should ask your life insurance company so tough questions including:
1.Does your life insurance have any monetary or cash value?
You might not know this but some life insurance includes a cash value which you can take a loan against if you ever need funds. Of course, your life insurance should not be your first stop for a loan but if that’s your only option and you can take that option, then at least you have some way to keep yourself afloat until things change. Term life insurance doesn’t normally have a cash value attached to it but whole life insurance especially universal life insurance, a type of whole life insurance, has a cash value associated with it. This “cash value” grows over the years so it’s like your money is working for you, and you can borrow against this money for things like college expense or other financial burdens life might throw at you. So, if having a “cash value” to your life insurance is important to you and you see yourself needing to borrow funds from your life insurance in the future, then consider investing in a universal life insurance (a type of whole life insurance) instead of term life insurance. If you are not sure what to get, then ask for a free consultation from your insurance company of find a lawyer that can answer some common questions you might have.
2.What if I outlive my life insurance?
When you buy life insurance, you have two options with how long you can have the insurance. A limited time or till death. You already know that if you have whole life insurance, you can’t outlive your insurance as it will paid out at the time of your passing. But what happens when you buy term life insurance? There is a possibility that you can outlive your life insurance especially if you and healthy. Of course, it’s a good thing to outlive your insurance, however, you also want to make sure that the funds you’re spending on the life insurance makes sense for you. Typically, term insurance as sold in multiple of 5 years – 5, 10, 15, 20, 30 years – so you can get as long or as short of a term than you want and you’ll pay yearly or monthly. So, what happens if your life insurance ends and you’re still alive. Do you get any benefits from it? Sadly, with term life insurance, once you outlive your life insurance, you’re no longer covered and you don’t get any more benefits from the insurance. But look at this way, even if you don’t get “money” or “benefits” paid out when the insurance ends, the term insurance served its purpose of making sure that you were insured when you needed it. Your family or loved ones didn’t have to deal with legal help of getting help with insurance claim or even look for local legal advice because you were covered all through the time.
3.Will my premium increase after I sign a contract on Term Life Insurance?
You can imagine that life insurance could cover people up to the end of their live which could be tens of years. The average lifespan is 70-80s and if you get a life insurance at 30 years old, you would have about 50 years of coverage, if we assume you live till 80. Some people live much longer than that. There is bound to be inflation in that 50 years and thus, it seems unlikely that the insurance premium remains the same for over 50 years. But it actually can, depending on what sort of insurance you buy. Regardless of which insurance you get, you will end up with monthly or yearly premium. Typically, this rate shouldn’t increase but that depends on your contract. There are two ways to deal with insurance premium and you want to know about them as well as ask questions before you sign those dotted lines. You have an option of buying insurance with a “level premium” which is a locked in rate for the life of the insurance. With a level premium, your rate might be higher upfront but at least you lock it in and are not subject to the whims of inflation and the economy. The other option is the “annual renewable” which pretty much means that you have a one-year contract that gets renewed yearly for a price that is most often higher to account for inflation and other variables. If you’re wondering why anyone would want an “annual renewable” life insurance, think about situations where you need it for a short term, for instance, if you’re expecting life insurance coverage with your work, you might get a short term one to cover you until the one for your job kicks in. So, ask those questions and also know if they have an insurance claims adjuster to work with if prices were to change down the line. When in doubt, check around some attorney websites to see if you can find an affordable attorney that can give you some of the answers you might need.
4.Will my premium increase after I sign a contract for Whole Life Insurance?
Whole life insurance is one of those things you start and forget about it. Like term insurance which can cover you for a duration of your life if you do multiple renewals, whole life insurance covers you from the start to the finish. Once you agree and set up payment, you don’t have to do anything else but just pay your agreed rate monthly or yearly or as agreed. You set it and forget about it and move on with your life. With whole life insurance, as long as you pay your premium, you’re covered and insured. Since whole life insurance also comes with a cash value, as long as you don’t default in your payment, your cash value keeps accruing based on a guaranteed rate of return (determined also by the financial market) and you can use the cash value while you’re still alive. The death benefits does not change so the payout will still be the same. You want to ask your insurance broker or provider if your rate will remain the same or if it is subject to change and how to guarantee that. You also want to ask about the rate of growth of your cash value to make sure you’re getting the best for the benefits of the insurance. Again, be aware that whole life insurance costs more but everything in the policy is pretty much guaranteed so you’d have less to worry about. When in doubt, check with a family law office or a small lawyer law firm for answers to any insurance questions you might have.
5.What if I don’t want the term life insurance or whole life insurance, is there another option?
Yes, there is a slight variation of whole life insurance and this is called Universal Life Insurance and the main one is the Guaranteed Universal Life insurance. Like regular whole life insurance, the death benefits don’t change and the payment remains stable as well. However, unlike the regular life insurance, there is no cash value to the guaranteed universal life insurance, and insurers require that you don’t miss payments or you stand a chance of losing all you’ve already paid for. So, if you think you might miss some payment deadlines in the future for whatever reason, then this might not be the best life insurance for you. The life insurance will cover you till death and is cheaper than the whole life insurance and you can also decide how long you want the death benefits guaranteed. But be aware that when you walk away from this universal life insurance unlike the main whole life insurance, you leave with nothing. But, that’s the cons. The good thing about this type of insurance is that it’s cheaper than the regular whole life insurance and you can decide how many years you want the insurance to be guaranteed through. There are two other universal life insurances – indexed universal life insurance where the value of your life insurance is linked to the stock market and your gains are decided with a formula. For the most part, you don’t get as much gains like you would if you traded directly with in the stock market. The benefit of this insurance is that you can adjust your benefit as your family needs change, so, death benefits and premiums are flexible. The third type of universal life insurance is known as Variable Universal Life insurance. Variable life insurance has a value but the value is tied to bonds, money market or investment account thus giving you a chance for large gains or if the market is doing poorly, losses. The other disadvantage of this is that broker fees can get somewhat expensive and this can deplete the cash value of your insurance. But you have flexible payment and death benefits which can are adjustable to fit your needs. If you are unsure which one to get, talk with your insurance provide for more details or simply get an attorney or talk to a legal law firm or even just work with a local legal aid so you get the right product for your family.
6.What is your underwriting process and who will do it?
Underwriting simply means reviewing your application to determine what to charge you based on how much of a risk you are. The riskier you are to the company, the higher the cost. If you have pre-existing conditions or family history of certain serious diseases, your insurance payment could be potentially higher than if you were otherwise healthy. Smokers for instance get high life insurance premium than none smokers. You want to ask the insurance company about their underwriting process so you know how to prepare and what to prepare for. Almost every insurance company will ask you to take a medical exam. You will also be required to complete a full medical form that accesses your health and lifestyle. If you engage in high risk activities, your premium might be higher than those you don’t engage in similar activities. Sometimes, some insurance companies use outside underwriters and this something you should ask. Are they going to use their own underwriter so you know the process is controlled for everyone and a specific standard is used to set prices, or are they using private underwriters who could be arbitrary with their numbers as they might carter to different insurance companies with different guidelines? The best way to get insurance is through a fully underwritten life insurance as this tends to be cheaper as your risk factors have been considered. The other options of life insurance underwriting include a simplified issue life insurance which doesn’t require medical exams and a guaranteed issue life insurance which covers you with no questions asked and no medical exams done. As you can imagine, this is the most expensive way to buy insurance. So, check with the insurance company to know what their underwriting process is and see how it can work to your advantage. And if you are unsure of why your premium is what it is, you can always call and ask for more insurance company or try to get attorney help or speak with some legal advisors so you know the best way to proceed. Please make sure to avoid being misguided by fraud lawyers by doing your homework first.
7.Do you offer other type of life insurances based on Specific Situations?
It’s great to have life insurance specifically for life and death, but what about other things that happen between living and getting to the end? Is there other sort of “life” insurance that you might need and if so, can the life insurance company provide these to you so you’re not working with multiple companies? There are other difficulties that you can experience in life that you might need coverage for including help with relief from mortgage, credits, accidents, and joint life/partnership, and having coverage for them will make life so much easier. Sure you can work with an insurance attorney to get legal aid advise and perhaps get car accident compensation, injury compensation, file a car insurance claim, and other reasons why you might need to find a lawyer to work with you but if you don’t have to do all that, things will be so much easier. Ask your insurance company if they provide a mortgage life insurance (covers your balance of your mortgage and pays you lender if you die), credit life insurance (covers your loans and liabilities and pays your lender if you die), accidental death and dismemberment (covers dying from a car crash or loss of limbs and other vital organs/sense if you’re involved in any sort of accident), and joint life insurance (where you and your significant other, typically spouse, are insured together – in this type of insurance, the surviving partner is the beneficiary, and if both persons die, the surviving kids or other designate heirs receive the payout). Knowing the full extent of what your potential insurance company can offer you helps you decide whether to work with them or not. It will save you pain and suffering, time spent finding the best personal injury lawyer of looking for a lawyer referral, a few other things. So, ask those questions now so you get the answers you can work with!
8.Does Your Insurance Cover Funeral Expenses?
Some life insurance will take care of your funeral expense which include memorial service, funeral and burial. Some even take care of burial plot and mortuary and other related things. It does sound morbid to be discussing death but it’s everyone’s reality. Knowing what a potential life insurance company would cover in the event that you are no longer here is as important as buying that life insurance. You want to make sure your loved ones are not stuck with finding funds to bury you when your life insurance could have provided funds for that process. You also want to know the extent of what they can do for you and how quickly this can be done. No need making your bereaved family wait for weeks to the payout of have to hire a family attorney or scrambling for legal advice just to make sure you’re buried properly, so ask questions upfront and when appropriate, make the people closest to you know what sort of provisions you’ve made in the event that you are no longer with them. When an emergency arises and they are trying to deal with the loss of a loved one, they might not be in the position to make phone calls with the life insurance just to figure out what is covered or not covered, so do it in advance and let it be known. Looking for insurance lawyer or looking for an attorney or lawyer should not be on their list of things to do. If your insurance doesn’t offer taking care of burial expenses as part of the life insurance, perhaps you could add it on. Ask those hard and legal questions so you get the answers you need.