Frequently Asked Questions
Applying for life insurance is a new experience for many people. We know this can be a daunting experience for many, so we have have provided these frequently asked questions to, hopefully, give you some answers to questions you might have:
General Life Insurance Questions
- What is life insurance?
- Who needs life insurance?
- When should I purchase life insurance?
- How much life insurance do I need?
- How much can I get?
- Should my spouse have her own policy?
- Who should I name as my beneficiary?
Life Insurance Types
- What are the different types of life insurance?
- What is term life insurance?
- What term length do I choose?
- Can I change the benefit amount at any time?
- Can I change the length of term at any time?
- What happens at the end of the term?
- What is permanent life insurance?
- What is mortgage insurance?
- How does return of premium life insurance work?
Life Insurance Quotes
- What’s the difference between the initial quotes and the health analyzer quotes?
- What is a health class?
- Which policy should I choose?
- What does the A.M. Best rating mean?
- Are the quotes on this website guaranteed?
- What does modal premium mean?
- Why is it more expensive to pay monthly?
- Should I replace my current policy?
The Application Process
- How long will my application take to approve?
- Who is my agent?
- Who is my case manager?
- Is there a fee for your services?
- What is temporary insurance?
- Do I have to submit a payment with my application?
- What is underwriting?
- Why do I need a medical exam?
- What’s included in the medical exam?
- Can I use my own physician for the medical exam?
- What is the APS (Attending Physician Statement)?
- Will my Credit be checked?
- Will a bankruptcy affect my application?
- Will I receive the results of my medical exam?
- Why do they need my financial information?
- Why do they need social security numbers?
- Can I change my beneficiaries at a later date?
- My doctor said there isn’t a problem – why does the underwriter?
- What if I fail to disclose information to the underwriter?
- Will my citizenship/residency status be an issue?
- Will frequent international travel affect my application?
- I recently quit smoking. Can I get non-smoker rates?
- When does my coverage begin?
- What is the contestable period?
- What happens if I don’t continue to make my premium payments?
- Will my premiums ever change?
- Can I convert my term policy to a permanent policy?
- Will my final quote be the same as my original quote?
What is life insurance?
Life insurance is a legal contract (policy) between you (the insured) and an insurance company (the insurer). In the contract, you agree to pay a fee to the insurance company, either periodically (monthly, quarterly, semi-annually or annually) or in a lump sum. In return, the insurance company agrees to pay a sum of money (face amount or death benefit) to a person (or persons) or entity (e.g. a trust) you designate in the contract as the policy’s beneficiary (provided the policy is in force at the time of death).
Who needs life insurance?
If you have a spouse (or partner) and/or children that would suffer financially if you were to die, you need life insurance. There are others who need life insurance (e.g. business partners), but the main incentive to own life insurance always has been to ensure your loved ones will be taken care of financially should you die.
When should I purchase life insurance?
You should purchase life insurance now if:
- If you are married (or about to get married) and your spouse depends on your income.
- If you have young children (or about to).
- If you are married and own a home with a mortgage.
- If you have a large estate and expect that your heirs will be hit with a big estate tax bill.
- If you are a partial owner of a business and have a buy/sell agreement with your partner(s), but no way to fund the buy-out of your partner’s shares should he/she pass away (and vice-versa).
- If you have a special-needs child who will need special care should you and/or your spouse die.
How much life insurance do I need?
There are several methods of determining how much life insurance you need. One method is using the multiple of income method, using a multiplier of your income to determine the benefit amount. Between 25 and 35, we recommend 20-25 times your income; between 35- 50, multiply your income by 15; above 50, use a factor of 10. These are only general guides, as every situation will vary.
You can also use our calculator, which uses a different method. Ultimately, the cost will be a factor too, as you have to maintain the premium payments over time.
How much can I get?
Now that you have determined how much you need, hopefully the insurance company will offer you that amount. Insurance companies use multipliers as described above and will not provide you with more coverage than they think you need, based on their formulas. There is some flexibility there, so if you have needs that exceed these formulas, your agent can help you “sell your case” to the underwriter.
Should my spouse have her own policy?
If she/he is working and your family would suffer financially from the loss of income if your spouse were to die, your spouse should definitely have her /his own policy. If you have a non-working spouse, such as a stay-at-home mom, there’s a good argument for coverage for that spouse too, as all the services she provides (child-rearing, housekeeping, etc.) would need to be arranged for if she were to die.
Who should I name as my beneficiary?
Most people name their spouse (or partner) as the primary beneficiary and their children as secondary (or contingent) beneficiaries. Secondary beneficiaries receive the death benefit if the primary is no longer alive. You can name any person (or entity) that has an insurable interest in you (meaning they would suffer a financial loss if you were to die).
Life Insurance Types
What are the different types of life insurance?
There are basically two types of life insurance – permanent and temporary. Whole life insurance and Universal life insurance are two types of permanent life insurance, both providing coverage for the entire life of the insured person. Term life insurance provides temporary coverage for specified periods of time (the term), typically for 10, 15, 20, 25 or 30 years.
What is term life insurance?
Simply stated, it’s life insurance protection lasting a limited number of years (typically 10, 15, 20, 25 or 30 years) that expires without value if the insured survives the stated term period. Most term policies can be renewed (at higher premium) at the end of the term or may be able to be converted to a permanent policy during the term period.
What term length do I choose?
If you have a specific time period you need covered, such as for a 30-year mortgage, select the term that will cover that period. As life insurance can be viewed as income replacement, some people try to get coverage lasting until retirement age, while others get coverage lasting until their young children are beyond college-age.
Can I change the benefit amount at any time?
You can make changes during the underwriting period but you cannot change the length of the term once the policy is in force without having to undergo underwriting again.
Your insurance coverage expires at the end of the term. You will be given an opportunity to renew the policy, but at a much higher premium. It’s usually much less expensive to purchase a new policy, if your health hasn’t changed.
Permanent life insurance lasts for your whole lifetime and, therefore is guaranteed to pay a death benefit, provided premiums have been paid as required. Whole life insurance and universal life insurance are different types of permanent life insurance.
Mortgage life insurance is reducing term life insurance. The death benefit decreases annually to keep level with your mortgage balance. Due to the lower cost of level term insurance, mortgage insurance has fallen out of broad use today.
How does return of premium life insurance work?
Return of premium life insurance is level term insurance with a bonus – if you outlive your policy’s term, you will receive all your premiums back. It is more expensive than regular term insurance and the cost difference increases with age, so we don’t recommend this type of policy for older ages.
Life Insurance Quotes
What’s the difference between the initial quotes and the health analyzer quotes?
The initial quote you receive are based on your estimate of your health class. The Health Analyzer incorporates company-specific health and lifestyle factors, which produces a more accurate assessment of your health class.
What is a health class?
Life insurance companies use certain criteria to determine the risk of dying you present to the insurance company. These health and lifestyle criteria include sex, age, build, family history, cholesterol, blood pressure and dangerous work or hobbies, to name a few. By evaluating this information, the insurance company can assign you a Health Class, which helps determine the premiums you will pay for your policy.
Which policy should I choose?
Because there are very few differences from one term life policy to an other, we recommend that you choose the least expensive policy from an A-rated (or higher) company, unless you have a company preference.
What does the A.M. Best rating mean?
From the A.M. Best website: “A Best’s Financial Strength Rating is an independent opinion of an insurer’s financial strength and ability to meet its ongoing insurance policy and contract obligations. It is based on a comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance and business profile.”
As you are trusting an insurance company to be there to pay a claim, if needed, you want to make sure the insurance company will be around when needed. A Superior A.M. Best rating (A++ or A+) for an insurance company is a strong indication that the insurance company is financially sound (we also recommend looking at other independent ratings, such as Standard & Poor’s, Fitch and Moody’s).
Are the quotes on this website guaranteed?
Unfortunately, we can’t guarantee the quotes. They are estimates based on the information you provide on the website, either by “guessing” your health class or by using the Health Analyzer. The final quotes are revealed at the end of the underwriting process and will be based on your application information and health and other information gathered during the process. If you have answered the questions honestly and there are no surprises during the underwriting process, there’s a strong chance your final quotes will match or be close to your original quote.
What does modal premium mean?
Modal premium is simply the premium paid on a policy, based on the frequency of premium payments, which could be annual, semi-annual, quarterly, monthly, or weekly. If you are paying $35.00 monthly premiums, your modal premium is $35.00.
Why is it more expensive to pay monthly?
Life insurance monthly premiums are approximately 3% more than annual premiums, as there is an administrative cost to the insurance company for processing eleven additional payments. While it costs a bit more, many people enjoy the convenience of monthly drafts from their checking accounts.
Should I replace my current policy?
We recommend (as do all state insurance regulators) that you consider all the ramifications of replacing your policy before you do. Your agent should do a cost analysis, including a review of cash value lost, if any to show you the benefit or penalty of replacement. Another factor to consider is the new policy will come with a new two-year contestable clause, which all policies have.
The Application Process
How long will my application take to approve?
The application processing time varies case to case, but the average time is 4 – 6 weeks from the time we receive the application in our office. The factors that slow down the process are applicant failure to completely answer questions or send in additional information and; physicians’ slow response in submitting medical records to the insurance company
Intramark Insurance Services, Glendale, California is your agency and you will be assigned an agent from within the agency to assist you with your application and answer your insurance questions.
Who is my case manager?
You will also be assigned a case manager, who will be your main contact during the underwriting period. He/she will contact you via email and/or telephone to request additional information as needed by the insurance company and will give you status reports to keep you up to date during the process.
Is there a fee for your service?
What is temporary insurance?
When you apply for a life insurance policy, you will be given an opportunity to submit premium with the application and, in so doing, get temporary insurance while the application is being processed. If you don’t currently have life insurance, we recommend that you get this temporary coverage. Your application will have details about the coverage and requirements for binding it, so read it carefully.
Do I have to submit a payment with my application?
What is underwriting?
Underwriting can be defined as the process of examining, accepting or rejecting insurance risks, and classifying those selected, in order to charge the proper premium for each. An underwriter will review your application, medical exam results and additional information as needed and will assign you a health class, which your rates will be based on.
Why do I need a medical exam?
Applications for most life insurance policies require a paramedical exam from a registered nurse. The exam can be done at your home or place of work or local office, if available. These nurses are contracted with one of the paramedical exam companies approved by the insurance companies.
What’s included in the medical exam?
The exam typically includes blood and urine samples, blood pressure readings, height and weight measurements and questionnaire (additional tests, such as EKG, might be required due to age or death benefit applied for). As it is recommended that you fast for eight hours prior to the exam, we usually suggest you get your exam first thing in the morning, if possible.
In order to get the best possible results from your exam, please follow the tips on How to Ensure Accurate Medical Exam Results.
Can I use my own physician for the medical exam?
You will not be able to get examined by your own physician or use results of recent physician exams. The insurance companies require that the exam be performed by a nurse/paramedic (and,sometimes a physician) contracted with one of several exam companies appointed by them. For your convenience, the exams can be performed in the comfort of your home or office.
What is the APS (Attending Physician Statement)?
The APS is a report the insurance company requests from an applicant’s personal physician when additional information is needed to support medical information disclosed in the application or in the medical examiner’s report. If there is no significant medical history, at the discretion of the underwriter, an APS might not be required. Due to physicians’ busy schedules, it sometimes takes quite a while to receive the APS from a physician and, therefore can increase the time it takes to underwrite your policy.
Will my Credit be checked?
The insurance company does not run a credit check as a part of the underwriting process. You may be asked to provide additional financial information during the underwriting process but no official check of your credit will be performed.
Will a bankruptcy affect my application?
Bankruptcies can affect your life insurance application depending on several factors, such as how recent the bankruptcy, what type of bankruptcy and the date of its discharge. Each bankruptcy is taken on a case by case basis by the insurance company. We can help to determine if there will a problem based on your specific details.
Will I receive the results of my medical exam?
The results of the blood and urine tests will be available to you. They will either be mailed to you or be available online. The results come directly from the insurance company and/or the medical exam company. LifeInsure.com does not receive them as they are confidential.
Why do they need my financial information?
Financial information is required on every application to determine if the amount of insurance is appropriate to your income. The information is kept private and used only for the purpose of underwriting your application only.
Why do they need social security numbers?
Social security numbers are used for the purpose of identification whether in obtaining your medical information and records, or paying out benefits to your beneficiaries. If the application asks for a social security number, it must be provided.
Can I change my beneficiaries at a later date?
My doctor said there isn’t a problem – why does the underwriter?
Your doctor is looking at your overall health and morbidity and working with you to improve conditions and maintain a healthy life and lifestyle. The underwriter is looking not only at mortality but is also governed by the policies of the insurance company. It is the underwriter’s job to determine your specific risk. There are some factors to which the underwriter has some discretion and others which are clearly laid out by insurance company policy.
If your application has been approved other than it has been applied for and your rate has been increased, we are happy to explain the circumstances which led to that decision as well as advocate on your behalf with the underwriter.
What if I fail to disclose information to the underwriters?
We recommend that you reveal all information that’s materiel to the insurance application. When in doubt, it’s best to over-reveal than under-reveal. The insurance company has the right to contest a claim in the first two years of the policy if they suspect a precipitating cause of a death was known about but not revealed in the application.
Will my citizenship/residency status be an issue?
All of the insurance companies we work with require applicants to be U.S. residents (U.S. citizens or those that have permanent visas (green cards). U.S. residents who have temporary work visas can get coverage in some cases.
Will frequent international travel affect my application?
If you do travel frequently, the underwriter will want to know details of your travels, including countries visited, frequency and reason for visits (business or travel). If you travel to countries that are on the U.S. State Department’s list of countries to avoid, you might not qualify for life insurance. We know which insurance companies allow the most leeway in these lists, so check with us before you apply.
I recently quit smoking. Can I get non-smoker rates?
If it has been a year or longer since you quit smoking, some companies will give you Standard Non-Tobacco rates. If it has been 2 or 3 years, a few companies will give you Preferred Non-Tobacco rates.
When does my coverage begin?
Your life insurance coverage is in force when we receive your application and payment in our office. If you arrange for temporary insurance when you submit your application, you will be covered when we receive your application and payment in our office (check the details of your temporary coverage, as the benefit amount might differ from the death benefit you are applying for).
What is the contestable period?
The contestable period is the period of time during which the insurance company may contest a claim on a policy because of incomplete or misleading information furnished with the application. Most policies have a contestable period of two years.
What happens if I don’t continue to make my premium payments?
If you miss a premium payment most policies have a grace period of 30 days. At the end of the grace period, your policy will lapse and will no longer be in force. In some cases, the insurance company might reinstate the policy if you pay the premiums due.
Will my premiums ever change?
In a level-premium term life policy, your premiums will never change during the term period. If you choose to renew your policy at the end of the term, your premiums will increase significantly. In some flexible-premium universal life policies (without lapse protection), your premiums can change.
Can I convert my term policy to a permanent policy?
Most term policies have conversion privileges, which allows you to convert your term policy to a permanent policy during the term period (in some cases, the conversion option period is shorter than the term period). The main benefit of conversion is that your medical insurability is guaranteed (medical underwriting is not required for the new policy).