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How Much term Insurance Do You Need?

A general industry rule of thumb is life insurance policy from ten to twenty times your gross annual income is considered to be adequate coverage. For example, if your gross income is approximately $35,000 per year, the suggested level of coverage would be approximately $525,000 (somewhere between $300,000 and $700,000). Of course this is just a general rule, you will have to decide if it is appropriate for you.

What is Permanent Life Insurance?

Permanent insurance policies provide coverage for the entire life of the policy holder. It is different from term insurance in that it includes a cash value build-up. The premiums remain level throughout the life of the contract.

What is term insurance?

Term is the lowest cost life insurance product available. When you buy term life, you are purchasing "pure" insurance which typically does not include a cash value or a savings feature. Term Life insurance, as the name implies, is purchased for a specific “term" or length of time. Once that term period has arrived, and you do not convert your term policy to a "permanent" type, your life insurance policy will expire. If the insured dies within the “term period", the predetermined death benefit will be paid to the beneficiaries.

What are the benefits of Level Term vs. Yearly Renewable Term?

Level term insurance includes low premiums and steady coverage over the term of the policy. In other words, your premiums do not go up and your coverage does not go down as long as your premiums are current "annual" or "Yearly Renewable Term" offers the lowest initial cost life insurance available. Premiums for this type of life policy will start very low, however, the premiums will increase each year. In general, Yearly Renewable Term policies are most efficient during the first 3 to 4 years. If you plan to keep your policy for longer than 3 to 4 years, you should consider Level Term coverage Conversion may be effected at attained age (premiums based on the age attained at time of conversion) or at original age (premiums based on age at time of original issue.)

What is Decreasing Term Insurance?

Decreasing Term insurance is Term life insurance on which the face value slowly decreases in scheduled steps from the date the policy comes into force to the date the policy expires, while the premium remains level. The intervals between decreases are usually monthly or annually.

What is Evidence of Insurability?

Evidence of insurability is any statement or proof of a person's physical condition, occupation, etc., affecting acceptance of the applicant for insurance.

What is Face Amount?

Face Amount is commonly used to refer to the Principal sum involved in the contract. The actual amount payable may be decreased by loans or increased by additional benefits payable under specified conditions or stated in a rider.

What is Guaranteed Insurability?

Guaranteed Insurability or Guaranteed issue is an arrangement, usually provided by a rider, whereby additional insurance may be purchased at various times without evidence of insurability.

What is Key Employee Insurance?

Key Employee Insurance is protection of a business against financial loss caused by the death or disablement of a vital member of the company, usually individuals possessing special managerial or technical skill or expertise. Also called key executive insurance.

What is the Medical Examination?

Medical Examination is usually conducted by a licensed physician; the medical report is part of the application, becomes a part of the policy contract and is attached to the policy. A "non-medical" is a short-form medical report filled out by the agent. Various company rules, such as amount of insurance applied for or already in force; applicant's age, sex, past physical history, data revealed by inspection report, etc., determine whether the examination will be "medical" or "non-medical".

What is a Paramedical Exam?

A paramedical exam is an exam conducted by a licensed nurse on behalf of the Insurance Company. Paramedicals may also include completing the life insurance application, taking a blood and urine sample, and transmitting the information to the insurance company and medical lab for review.

What is the Primary Beneficiary?

In life insurance, Primary Beneficiary is the beneficiary designated by the insured as the first to receive policy benefits.

What can term insurance do for me, my family and my business?

Term insurance is bought by millions of people for a number of reasons. Families use Term for security. In case the insured passes away, your Term policy insures there will be money to use to pay for your home, college, outstanding loans and other major expenses. Small Business Owners use Term insurance as low cost debt protection to cover notes, lease obligations, business real estate mortgages and other expenses. Business Partnerships Often use Term Insurance to buy out partner's in the event of their death. For example, the deceased's beneficiary gets the insurance proceeds and the ownership in the company is then transferred to the remaining Partnered(s) Corporations use Term as stock purchase redemption. In this case, the corporation gets the insurance proceeds and buys back the stock from the deceased's beneficiary, notably the surviving spouse or estate. For businesses, Term Insurance can provide real benefits for the beneficiaries with no negative cash flow impact on the company.

How is an individual rated?

Individuals are rated by their age, health history and in some cases, by their careers. Younger people generally have lower premiums.

What are the reasons NOT to buy term insurance?

Term life is a good choice for many People, but NOT for the following:
A) To fund expected federal and/or state estate tax obligations.
B) To fund an irrevocable life insurance trust.
C) To fund trusts for the purpose of Providing and estate.
These reasons would be better served with a form of permanent life insurance.

What is the Cash Value?

Cash Value is the equity amount or "savings" accumulated in a whole life policy.

What is the Conversion Privilege?

Conversion Privilege allows the policy-owner, before an original insurance policy expires, to elect to have a new policy issued that will continue the insurance.