Frequently Asked Insurance Questions
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What is the difference between individual life and group life insurance?
Individual life is personally bought by an individual while group life is offered by an employer as part of an employee’s benefits.
Group insurance often costs less but still depends on the individual’s age or health condition. Group insurance though is coterminous with your employment. You lose your life insurance when you are no longer employed with the company.
It is therefore always beneficial to have your own individual term life insurance policy to ensure continuous coverage regardless of your health and change in employment.
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How much coverage amount can an individual qualify for?
The coverage an individual can qualify for is typically the equivalent of up to 20 times his annual income. The coverage amount though decreases with age (the closer an individual is to retirement).
An individual can qualify for more than 20 times his annual income for coverage if other than employment he has assets to protect. Homemakers can likewise qualify for the same life insurance coverage as her spouse even when unemployed.
Unemployed individuals can still get up to $50,000 or $100,000 of coverage for life insurance products such as final expense needs. Their application form should include disability or retirement income details to prove that they can afford to pay monthly premiums
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How much is the application for a life insurance policy?
An application for a life insurance is needed to get a rate quote. The possible plan holder does not have to pay for it. If a physical examination is required, the insurance company will pay for it.
Upon application you are without any obligation to purchase a policy. When your application for coverage is approved, you can change the coverage amount and policy terms to fit your budget especially when the cost is higher than expected due to issues related to health.
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Is it a good idea to replace a current life insurance policy?
Needs change over time. After the initial guaranteed level term period, premiums of most term life insurance policy increases every year.
If you are almost at the end of initial term period and want a fixed rate for the next pre-determined number of years, applying for a new policy and surrendering or replacing your old policy may be a wise decision.
How to replace existing policy coverage:
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Make sure you have new policy coverage before canceling your old policy. There are instances when an individual can no longer apply for a new policy or it may be challenging to apply for a new one because of health issues which were not present when you first applied for policy coverage.
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If you have an existing policy you need to indicate if you want to replace it, as well as the insurance company and the amount of coverage of your current policy.
Your total amount of coverage can be up to 20 times your annual income. If you decide to keep your current policy, the coverage amount of your current policy will not be considered as part of your total coverage for the new policy.
Example: Your annual income is $ 50,000 and you are qualified to get life insurance of up to $100,000. If you already have a $500,000 policy and decide to keep it, you can qualify for an additional $500,000 policy for $1 million coverage.
If you want to replace your current $500,000 policy, you can apply for $1,000,000 coverage with the new insurance company.
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Most insurance companies do not take into consideration your group life insurance as it is coterminous with your employment. This means, you lose your term coverage when you leave your employer who offered it to you. Thus, when the insurance company asks about your current coverage policies, only include policies you bought on your own.
All states follow these replacement procedures except the state of New York which entails additional paperwork to make sure everyone understands your replacement intentions. This additional require is intended to protect the consumer and is only done in the state of New York.
Thus, if you live in New York and want to replace your current policy coverage or take on a new one within 6 months of cancelling your old coverage policy, you will be covered by Regulation 60. The new life insurance company will need to inform your old insurance company of your replacement. This can delay the approval of your new policy coverage for months.
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How can you be ensured of the best physical examination results?
Taking a paramed examination is part of the approval of a life insurance coverage policy. The insurance company will interview you about your medical history so they can comprehensively evaluate your current health. The exam includes the recording of your weight, height, blood pressure, and pulse rate. In some instances it may also include urine and blood collection.
The results of your examination will be forwarded to the insurance company. Lab results of your urine and blood will also be sent to the insurance company for assessment.
To ensure accurate results of your paramed examination, it is recommended that you follow these procedures:
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Itemize medications and dosages you are currently taking
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Make a list of names, addresses, and phone numbers of clinics, and doctors you have visited in the last 3-5 years.
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Fast for 8 hours prior to your scheduled paramed exam
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Limit your intake of high-cholesterol and salty foods 24 hours prior to the exam
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Limit nicotine and caffeine intake 1 hour prior to the exam
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Avoid alcoholic beverages for at least 12 hours prior to the exam
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Drink a glass of water 1 hour prior to the exam
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Do not do any strenuous exercises 12 hours prior to the exam
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Sleep well the night before the exam
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Bring along a picture ID
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How long is the process of getting a life insurance policy?
The length of time it takes to process a life insurance policy depends on the kind of policy you are applying for.
A term life insurance policy that requires a medical examination will typically take about 3 weeks to complete. The process can take longer when the underwriter requests medical records from your doctor because of health issues you may have.
The underwriter can ask the client to get in touch with his doctor to expedite the submission of the medical records to speed up the process of application.
A policy that does not require a medical examination will take about 2 business days to complete (approved and in forced). These types of policies are ideal for seniors.
Since it does not include a physical examination, the insurance company has less or no health information about the applicant. The insurance company is therefore at greater risk thus coverage amount is limited.
If you are a healthy applicant, but hate needles, a no-medical examination coverage policy is a great option. It is however twice as much more expensive that a medically underwritten policy.
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Can I still get life insurance even if I have type 2 diabetes?
Most individuals with controlled type 2 diabetes can have a Table 2 health rating from many of the large insurance companies. This health rating is slightly higher than a standard rating.
If your diabetes is more complicated or you have other health issues aside from your type 2 diabetes, your policy coverage may be more expensive due to the increased risk to the insurance company.
To be guided accordingly, ask advice from a licensed insurance agent. You will need an application since the health situation of every individual is individually evaluated. Once the type of coverage applicable to your situation and your budget are determined, you can proceed with your application.
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Can I still qualify for life insurance even if I have pre-existing conditions?
It depends on the type of pre-existing condition you have. It is relatively easy to qualify for life insurance if you have high cholesterol, high blood pressure, or high blood sugar (e.g. type 2 diabetes) as long as your condition is under control and you are under the care of a doctor.
It can however be difficult to qualify for life insurance if you have had cancer (except skin cancer), or have had a heart attack 5 years before application.
If you have a high risk health condition, you can avail of the final expense and graded benefit policies. The premiums of these policies depend on the severity of your pre-existing condition. It is best to discuss your situation with an insurance agent to ensure a guaranteed approval.
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Should I wait until after I give birth to apply for life insurance?
It is the best time to apply for life insurance coverage when you are pregnant. Your health improves during this time because you stopped smoking and taking alcohol. Weight gain is taken into consideration when you are pregnant so underwriters do not use this issue for increased premiums.
There are some pregnancy complications though that is closely evaluated to determine the type of health risk. Certain health risks can increase your premium rates.
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Does a homemaker need life insurance? How much coverage can she qualify for?
A homemaker qualifies for the same amount of coverage as her husband even if she does not have her own income. A homemaker plays an important role in raising children. Should anything happen to the homemaker, the husband who is the income earner will have to take over her role of taking care of the children.
If the coverage policy of the homemaker is sufficient, the previously working husband can become a stay-at-home parent because the life insurance benefit can replace his income.
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How can I possibly increase my policy’s coverage amount?
This is normally not possible because if you want more coverage you will need to apply for a new policy and undergo the required physical examination.
Changes involving increase in term length or coverage amount can only be made within the first 30 days of your policy. You can however decrease the term length and coverage amount anytime. This is often done to lower the premiums.
It is always best to apply for the longest term length and amount of coverage you want to be qualified for. Once approved you can make changes to the term length and coverage amount before the beginning of your coverage.
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What are the payment options when getting life insurance policies?
Rules concerning the payment of premiums are the same for most life insurance companies. The most convenient way to pay for your monthly premiums is to make automatic payments – an authorized automatic draft from your savings or checking account.
You can choose to pay your premiums quarterly, semi-annually, or yearly if you do not like to make monthly automatic payments. . A bill will be sent to you monthly if you opt for this payment option.
Most individuals opt to make automatic payments as this is the same method they use for their other bills. They want to make sure their policy does not get cancelled due to non-payment.
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Do I send a down payment with my insurance policy application?
A down payment is not required when you send your insurance policy application. You can however send a down payment equivalent to 2 months’ premium if you want your coverage to start even during the underwriting process (usually about 3 weeks). The amount is refundable if you decide against getting the policy based on the final approved rate.
You do not also need to provide your billing information on the application. You can do so after approval and you decide to begin coverage as per the terms of the policy offered.
Most individuals though choose to wait for the approval of their application before making any payment and starting coverage. This is so they know the exact cost of the policy before making a payment. Coverage starts upon the payment of first premium due.
After approval of your policy, you can choose to make some changes if the rate is different from what you applied for or to make the premiums due fit into your budget.