Life insurance can be challenging to understand… We get it and may commiserate along with you. Many people in our team experienced the researching and buying process well before Haven Life arrived.
Which means we have been there, done that and will help you navigate the life insurance landscape to make a confident and informed decision of your. Below, a number of the most typical question we obtain from customers (together with our candid answers).
Does term life insurance go up each year?
Most term life policies don't increase on price every year. One type that does is definitely an “annually renewable” term life insurance policy. The premium within an annually renewable policy begins inexpensive (usually just one level premium policy), however the premium rises each year while you age. And, the more the word, the more expensive the premium becomes.
That said, we do not sell that kind of policy.
The Haven Term policy is really a “level premium” policy. This means the premium remains the same throughout the term length you chose for your policy. This ensures that, for the coverage term, what you pay every year continues to be same regardless of your age or health. Obviously, you can choose to continue your policy a the end of the term length, but in a higher premium.
A level premium also cuts down on the risk that you won't be able to pay the policy a few years down the road. Important to note, this is not an uncommon or expensive feature to come by. Many policies from top insurers offer level premiums.
Can life insurance convey more than one beneficiary?
Yes, most, if not all, life insurance coverage companies give you several beneficiary. For instance, Haven Term buyers can list up to 10 primary beneficiaries and 10 contingent beneficiaries.
A primary beneficiary may be the first person (or persons should you elect several) that the death benefit would be paid to. Contingent beneficiaries are contacted if your primary beneficiary has passed away.
As an example, if you name your partner as the beneficiary and a sibling who would take care of your kids as a contingent beneficiary, the sibling would only get the death benefit if your spouse would die before it's paid.
Most people list one or two primary beneficiaries and one contingent beneficiary. That said, this is an excellent here we are at us to remind you to regularly check who you've listed as a beneficiary and ensure the contact information you've found here is correct.
Is life insurance taxable towards the beneficiary?
Typically, a life insurance death benefit is received free of federal income tax. However, you will find less common scenarios where the payout can be deemed an income taxable event or a 'gift' that may be susceptible to federal and state gift taxes:
- If you and your business own a policy and name your employee the beneficiary, this may be considered compensation, and thus, subject to tax.
- If you own the policy on your spouse life insurance coverage and then name your child like a beneficiary, the death benefit turn into taxable. That's because when a third-party beneficiary is involved (somebody that isn't owner or even the insured) then your death benefit could be deemed a present and could be susceptible to gift tax.
We must disclaim that we don't provide legal or tax advice, but we think the above mentioned information provides you with considerations when choosing a beneficiary.
Does term life need a health check?
There are a few life policies that do not require a health check. However, they are much more expensive than medically underwritten policies because the insurer is acquiring significant chance of you dying within the term length without knowing your current health state or health background. Typically, these “simplified issue” policies in addition have a low cap for policy amounts at around $250,000, whereas medically underwritten policies can reach well over $1 million.
Most medically underwritten term life policies need a health check. However, some applicants may qualify for the InstantTerm process, which lets some eligible applicants (as much as age 45 and up to $1 million in coverage) finalize coverage without the need for an exam (Remember that: issuance from the policy or payment of benefits may rely on the answers succumbed the applying and the truthfulness thereof). This sophisticated technology analyzes the health information provided inside your application and other industry-standard data to consider instantly. Once you submit your application online, you will be informed if your medical exam is required.
If you do wind up needed a medical exam to finalize coverage… no problem. Test only takes 20-30 minutes and can be done (for free) out of your home or office. You may also end up getting temporary life insurance coverage while you wait to complete the exam.
Is life insurance coverage essential for a single person?
Life insurance often isn't essential for an unmarried and childless person. But there are several circumstances when, if single, you need to still consider investing in a policy, as financial dependents span not only your partner or children.
If you have significant cosigned debt, for example student loans or perhaps a mortgage that would fall for your parents or family members if you died, then you may want to consider term life insurance to cover those debts. Additionally, if you are single and the primary caretaker of the elderly person, then you should consider just how much it would cost to care for them if you died.
If you're single and still unsure, you can use our life insurance calculator to help determine whether you need coverage. Relax, no air-math required.
Does term life expire?
Yes, term life insurance expires after your designated policy term length – typically 10, 15, 20, or 30 years – or if you've failed to pay your premiums.
We mentioned above there are certain policy features you should look for. Another one to ensure that you have is guaranteed renewability, which most top insurers provide. Guaranteed renewability ensures that you may still get covered after the policy term length lapses. However, it'll likely be significantly more expensive as you will be older and potentially less healthy than you were whenever you bought the policy.
This is why it is so essential that you get ample coverage while you're young and healthy and you still revisit your life insurance needs during major life milestones: just like having another child or buying a house. This can prevent you from having an expensive bind 3 decades in the future.
Why is term life insurance often the cost effective for purchasers?
Term life insurance is a great value for most of us because it gives you the policy you'll need for the years you will need it most.
With term life, you pick a term length and coverage amount that matches your needs, you have to pay your monthly premium and you're covered. The coverage ends once the term length expires.
The other thing about term life insurance is that it's more affordable than you believe. Much less than your cable bill per month. For example, a 20-year, $500,000 Haven Term policy for a healthy 35-year-old male would cost $21 monthly.
Does term life cover death from illness?
Yes, a term life insurance death benefit will be paid if a policyholder dies from an illness. That's the entire reason for a life insurance policy: to provide financial protection for your family members in the event of your untimely death.
Worth mentioning, it can be hard to acquire coverage should you already have a life-threatening illness or chronic disease of some kind. In addition, it may be significantly more expensive.
However, if you were healthy when you purchased a policy and lots of years in to the term length, would, unfortunately, uncover that you're very ill, you needn't be worried about an insurance policy being paid out due to that illness. This is the risk that life insurers accept when covering something as unpredictable as a person's everyday life.
There it is.
We know that our industry hasn't always done the very best job of streamlining options and providing the facts you have to make life (insurance) less hard. We're trying to change that. When have questions, take a look at our Term life 101, FAQ or, just shoot us an email at help@havenlife.com. We'd gladly help.
