20 Life Insurance Facts You’ve Always Wanted to Know

This article compiles 20 life insurance facts, within the context of common questions that people ask about Life Insurance.

Is My Employer-Provided Life Insurance Enough?

  1. You might already have life insurance through your employer, but it’s probably not enough. Consider getting your own policy for better coverage.

Why Do I Need a Medical Exam for Life Insurance?

  1. Yes, you usually have to take a medical exam to get a life insurance policy. This helps the insurer figure out how risky you are to insure.
  2. The medical exam is necessary because it gives the insurer an idea of how likely you are to pass away during the policy term, which affects your premiums.

What Happens During the Life Insurance Medical Exam?

  1. The exam is similar to a regular check-up. They’ll check your vitals (like pulse and weight), take a blood sample, and sometimes ask for a urine sample or do an EKG.
  2. Sorry, you can’t go to your own doctor for the exam. The insurance company wants an unbiased third party to do it, but they’ll pay for it and send someone to your home or office.

What Do Life Insurance Companies Test For?

  1. The exam checks for things like high blood pressure, glucose, cholesterol, and nicotine use. They’ll also look at your body mass index (BMI).
  2. A healthy BMI can help you get the best classification and lower premiums, but you can’t crash diet right before applying. Insurers will ask if your weight has changed more than 10 pounds in the last year.
  3. Quitting smoking right before the exam won’t help because nicotine stays in your system for a while. Your smoking history can also affect your premiums.

How Do Life Insurance Classifications Work?

  1. Insurers have different classifications based on health and lifestyle factors, ranging from Preferred Plus to Substandard and Smoker. These determine your premiums.

Should I Disclose My Mental Health History?

  1. A history of depression might increase your premium, but you shouldn’t hide it. Insurers will likely find out anyway.
  2. It’s important, to be honest about your medical history because lying can be considered fraud.

How Do Life Insurance Companies Verify My Health Information?

  1. Insurers can find out about your health history through your exam results, medical records, prescription history, and other research.
  2. An underwriter works for the insurance company and determines how risky you are to insure based on your health and lifestyle information.

What Happens if I Lie on My Life Insurance Application?

  1. If you lie and the insurer finds out, you might get higher premiums, be denied coverage, have your policy canceled, or even have your death benefit not paid out.

What Is a Death Benefit?

  1. The death benefit is the amount of money your beneficiary receives tax-free if you pass away while the policy is active.

How Do Life Insurance Policies Pay Out?

  1. Some policies now offer accelerated death benefits, which let you use part of the death benefit if you become terminally ill. Beneficiaries may also be able to receive payments in installments.

What’s the Difference Between Term and Permanent Life Insurance?

  1. Term life insurance covers you for a set period, while permanent life insurance covers you for life and has a cash value component you can borrow against.

Which Type of Life Insurance Is Better?

  1. For most people, term life insurance is the better choice because it provides coverage during the years you’re working to provide for your family. Permanent life insurance is more expensive.

Who Should I Choose as My Beneficiary?

  1. You can have multiple beneficiaries and update them as needed, so don’t stress about choosing between loved ones.

How Does the Life Insurance Company Know When I Die?

  1. If you pass away, your beneficiary must file a claim with the insurer, providing a claim form, your death certificate, and the policy document to receive the death benefit.
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  • Nationwide
  • Allstate
  • Employers
  • The Hartford
  • Travelers
  • Liberty Mutual Insurance
  • Chubb
  • Safeco Insurance
  • Berkshire Hathaway Guard
  • Am Trust
  • Attune
  • and many more..

*Disclaimer: Information on this website is general insurance advice. Please speak with a local insurance professional as they are able to analyze the nuances of your specific business. This is an important step to ensure you don’t have any unknown gaps in your coverage.

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